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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

/x/	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended JUNE 30, 2002
or
/ /	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number		Exact name of registrant as specified in its charter and principal office address and telephone number		State of Incorporation		I.R.S. Employer ID. Number
1-14514		Consolidated Edison, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600		New York		13-3965100
1-1217		Consolidated Edison Company of New York, Inc. 4 Irving Place, New York, New York 10003 (212) 460-4600		New York		13-5009340
1-4315		Orange and Rockland Utilities, Inc. One Blue Hill Plaza, Pearl River, New York 10965 (914) 352-6000		New York		13-1727729

Indicate by check mark whether each Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /x/    No / /

As of the close of business on July 31, 2002, Consolidated Edison, Inc. ("Con Edison") had outstanding 213,144,081 Common Shares ($.10 par value). Con Edison owns all of the outstanding common equity of Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R").

O&R meets the conditions specified in general instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

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TABLE OF CONTENTS

								PAGE
Filing Format								3
Part I.—Financial Information
Item 1.		Financial Statements
				Con Edison
						Consolidated Balance Sheet		4
						Consolidated Income Statements		6
						Consolidated Statement of Retained Earnings		8
						Consolidated Statements of Comprehensive Income		8
						Consolidated Statement of Cash Flows		10
						Notes to Financial Statements		11
				Con Edison of New York
						Consolidated Balance Sheet		22
						Consolidated Income Statements		24
						Consolidated Statement of Retained Earnings		26
						Consolidated Statements of Comprehensive Income		26
						Consolidated Statement of Cash Flows		28
						Notes to Financial Statements		29
				O&R
						Consolidated Balance Sheet		35
						Consolidated Income Statements		37
						Consolidated Statement of Retained Earnings		39
						Consolidated Statements of Comprehensive Income		39
						Consolidated Statement of Cash Flows		41
						Notes to Financial Statements		42
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations
				Con Edison				48
				Con Edison of New York				63
				O&R				*
		O&R Management's Narrative Analysis of the Results of Operations						77
Item 3.		Quantitative and Qualitative Disclosures About Market Risk
				Con Edison				81
				Con Edison of New York				81
				O&R				*
Forward-Looking Statements								82
Part II.—Other Information
Item 1.		Legal Proceedings						84
Item 4.		Submission of Matters to a Vote of Securities Holders						84
Item 6.		Exhibits and Reports on Form 8-K						85

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*

O&R is omitting this information pursuant to General Instruction H of Form 10-Q.

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Filing Format

This Quarterly Report on Form 10-Q is a combined report being filed separately by three different registrants: Consolidated Edison, Inc. ("Con Edison"), Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R"). Neither Con Edison of New York nor O&R makes any representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

O&R, a wholly-owned subsidiary of Con Edison, meets the conditions specified in General Instruction H of Form 10-Q and is permitted to use the reduced disclosure format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, O&R has omitted from this report the information called for by Part 1, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and has included in this report its Management's Narrative Analysis of the Results of Operations. In accordance with general instruction H, O&R has also omitted from this report the information, if any, called for by Part 1, Item 3, Quantitative and Qualitative Disclosure About Market Risk; Part II, Item 2, Changes in Securities and Use of Proceeds; Part II, Item 3, Defaults Upon Senior Securities; and Part II, Item 4, Submission of Matters to a Vote of Security Holders.

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Consolidated Edison, Inc.


CONSOLIDATED BALANCE SHEET
(UNAUDITED)

					As at
					June 30, 2002			December 31, 2001
					(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric				$	11,335,704		$	11,145,400
	Gas					2,444,138			2,405,730
	Steam					760,053			758,600
	General					1,425,696			1,354,099
	TOTAL					15,965,591			15,663,829
	Less: Accumulated depreciation					4,576,424			4,472,994
	NET					11,389,167			11,190,835
	Construction work in progress					770,743			654,107
NET UTILITY PLANT						12,159,910			11,844,942
NON-UTILITY PLANT
	Unregulated generating assets, less accumulated depreciation of $25,048 and $21,289 in 2002 and 2001, respectively					463,176			291,039
	Non-utility property, less accumulated depreciation of $14,484 and $11,235 in 2002 and 2001 respectively					130,728			112,394
NET PLANT						12,753,814			12,248,375
CURRENT ASSETS
	Unrestricted cash and temporary cash investments					59,202			271,356
	Restricted cash					13,824			69,823
	Accounts receivable - customer, less allowance for uncollectible accounts of $33,632 and $34,775 in 2002 and 2001, respectively					640,183			613,733
	Other receivables					236,772			124,343
	Fuel, at average cost					13,253			18,216
	Gas in storage, at average cost					70,971			111,507
	Materials and supplies, at average cost					91,398			90,976
	Prepayments					68,463			79,687
	Other current assets					89,090			50,454
TOTAL CURRENT ASSETS						1,283,156			1,430,095
INVESTMENTS
	Other					217,822			216,979
TOTAL INVESTMENTS						217,822			216,979
DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
	Goodwill					439,944			439,944
	Intangible assets					83,903			85,783
	Accrued pension credits					868,706			697,807
	Regulatory assets
			Future federal income tax			610,276			659,891
			Recoverable energy costs			302,276			210,264
			Sale of nuclear generating plant			124,463			170,241
			Real estate sale costs - First Avenue properties			106,917			105,407
			Deferred special retirement program costs			82,909			81,796
			Accrued unbilled revenue			63,151			64,249
			Deferred environmental remediation costs			61,451			62,559
			Workers' compensation			55,453			62,109
			Divestiture - capacity replacement reconciliation			58,850			58,850
			Deferred revenue taxes			54,969			41,256
			World Trade Center restoration costs			34,975			32,933
			Other			111,599			88,260
	TOTAL REGULATORY ASSETS					1,667,289			1,637,815
	Other deferred charges and noncurrent assets					233,041			239,313
TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS						3,292,883			3,100,662
TOTAL					$	17,547,675		$	16,996,111

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

					As at
					June 30, 2002			December 31, 2001
					(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock, authorized 500,000,000 shares; outstanding 213,043,030 shares and 212,257,244 shares				$	1,514,493		$	1,482,341
	Retained earnings					5,276,276			5,251,017
	Treasury stock, at cost; 23,210,700 shares and 23,230,850 shares					(1,001,241	)		(1,002,107	)
	Capital stock expense					(35,412	)		(35,547	)
	Accumulated other comprehensive income					(15,083	)		(29,436	)
			TOTAL COMMON SHAREHOLDERS' EQUITY			5,739,033			5,666,268
	Preferred stock					212,563			212,563
	Long-term debt					5,935,001			5,501,217
TOTAL CAPITALIZATION						11,886,597			11,380,048
MINORITY INTERESTS						8,639			9,522
NONCURRENT LIABILITIES
	Obligations under capital leases					39,801			41,088
	Accumulated provision for injuries and damages					179,352			175,665
	Pension and benefits reserve					234,165			187,739
	Other noncurrent liabilities					39,551			30,159
TOTAL NONCURRENT LIABILITIES						492,869			434,651
CURRENT LIABILITIES
	Long-term debt due within one year					196,630			310,950
	Preferred stock to be redeemed in one year					37,050			37,050
	Notes payable					165,657			343,722
	Accounts payable					769,339			665,342
	Customer deposits					221,347			214,121
	Accrued taxes					96,909			146,657
	Accrued interest					81,528			80,238
	Accrued wages					75,218			77,131
	Other current liabilities					341,632			372,404
TOTAL CURRENT LIABILITIES						1,985,310			2,247,615
DEFERRED CREDITS AND REGULATORY LIABILITIES
	Accumulated deferred income tax					2,368,229			2,235,295
	Accumulated deferred investment tax credits					115,051			118,350
	Regulatory liabilities
			NYISO reconciliation			102,471			92,504
			World Trade Center casualty loss			78,787			81,483
			Gain on divestiture			42,182			59,030
			Deposit from sale of First Avenue properties			50,000			50,000
			Refundable energy costs			46,408			45,008
			Accrued electric rate reduction			38,018			38,018
			Transmission Congestion Contracts			78,757			4,896
			Gas Rate Plan—World Trade Center Recovery			36,388			—
			Other			201,657			185,188
	TOTAL REGULATORY LIABILITIES					674,668			556,127
	Other deferred credits					16,312			14,503
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES						3,174,260			2,924,275
TOTAL					$	17,547,675		$	16,996,111

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

			For the Three Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
OPERATING REVENUES
	Electric		$	1,400,045		$	1,531,949
	Gas			242,355			305,394
	Steam			70,488			89,666
	Non-utility			187,351			185,206
TOTAL OPERATING REVENUES				1,900,239			2,112,215
OPERATING EXPENSES
	Purchased power			752,587			766,678
	Fuel			46,749			57,230
	Gas purchased for resale			119,220			197,979
	Other operations			230,496			278,123
	Maintenance			98,863			116,340
	Depreciation and amortization			122,126			136,782
	Taxes, other than income taxes			269,253			256,661
	Income taxes			60,927			86,600
TOTAL OPERATING EXPENSES				1,700,221			1,896,393
OPERATING INCOME				200,018			215,822
OTHER INCOME (DEDUCTIONS)
	Investment income			403			1,840
	Allowance for equity funds used during construction			1,915			258
	Other income less miscellaneous deductions			2,229			(9,191	)
	Income taxes			1,975			1,552
TOTAL OTHER INCOME (DEDUCTIONS)				6,522			(5,541	)
INCOME BEFORE INTEREST CHARGES				206,540			210,281
	Interest on long-term debt			98,994			98,355
	Other interest			8,205			9,536
	Allowance for borrowed funds used during construction			(1,637	)		(1,684	)
NET INTEREST CHARGES				105,562			106,207
NET INCOME			$	100,978		$	104,074
PREFERRED STOCK DIVIDEND REQUIREMENTS				3,398			3,398
NET INCOME FOR COMMON STOCK			$	97,580		$	100,676
EARNINGS PER COMMON SHARE-BASIC			$	0.46		$	0.48
EARNINGS PER COMMON SHARE-DILUTED			$	0.46		$	0.48
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK			$	0.555		$	0.550
AVERAGE NUMBER OF SHARES OUTSTANDING-BASIC				212,756,843			212,115,094
AVERAGE NUMBER OF SHARES OUTSTANDING-DILUTED				213,931,052			212,554,995

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

			For the Six Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
OPERATING REVENUES
	Electric		$	2,700,893		$	3,239,323
	Gas			716,219			1,007,213
	Steam			211,954			347,918
	Non-utility			370,312			404,024
TOTAL OPERATING REVENUES				3,999,378			4,998,478
OPERATING EXPENSES
	Purchased power			1,466,083			1,775,284
	Fuel			111,292			241,288
	Gas purchased for resale			349,374			655,168
	Other operations			467,095			539,531
	Maintenance			198,571			244,786
	Depreciation and amortization			242,569			271,866
	Taxes, other than income taxes			536,484			564,469
	Income taxes			170,471			203,772
TOTAL OPERATING EXPENSES				3,541,939			4,496,164
OPERATING INCOME				457,439			502,314
OTHER INCOME (DEDUCTIONS)
	Investment income			1,105			4,623
	Allowance for equity funds used during construction			6,121			501
	Other income less miscellaneous deductions			501			(13,626	)
	Income taxes			16,067			7,138
TOTAL OTHER INCOME (DEDUCTIONS)				23,794			(1,364	)
INCOME BEFORE INTEREST CHARGES				481,233			500,950
	Interest on long-term debt			193,190			197,562
	Other interest			18,768			20,023
	Allowance for borrowed funds used during construction			(1,707	)		(3,221	)
NET INTEREST CHARGES				210,251			214,364
NET INCOME			$	270,982		$	286,586
PREFERRED STOCK DIVIDEND REQUIREMENTS				6,796			6,796
NET INCOME FOR COMMON STOCK			$	264,186		$	279,790
EARNINGS PER COMMON SHARE-BASIC			$	1.24		$	1.32
EARNINGS PER COMMON SHARE-DILUTED			$	1.24		$	1.32
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK			$	1.11		$	1.10
AVERAGE NUMBER OF SHARES OUTSTANDING-BASIC				212,546,200			212,078,295
AVERAGE NUMBER OF SHARES OUTSTANDING-DILUTED				213,677,032			212,439,716

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

			As at
			June 30, 2002			December 31, 2001
			(Thousands of Dollars)
BALANCE, JANUARY 1			$	5,251,017		$	5,040,931
	Less: Stock options exercised			3,059			5,430
	Net income for the period			270,982			695,835
TOTAL				5,518,940			5,731,336
DIVIDENDS DECLARED ON CAPITAL STOCK
	Cumulative Preferred, at required annual rates			6,796			13,593
	Common, $.555 and $2.20 per share, respectively			235,868			466,726
TOTAL DIVIDEND DECLARED				242,664			480,319
BALANCE AT END OF PERIOD			$	5,276,276		$	5,251,017

Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Three Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$	97,580		$	100,676
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	INVESTMENT IN MARKETABLE EQUITY SECURITIES, NET OF ($118) AND $16 TAXES, RESPECTIVELY			(168	)		23
	MINIMUM PENSION LIABILITY ADJUSTMENTS, NET OF $0 AND $293 TAXES, RESPECTIVELY			-			293
	UNREALIZED GAINS/(LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES DUE TO CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE, NET OF $0 AND $1,178 TAXES, RESPECTIVELY			-			850
	UNREALIZED GAINS/(LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES, NET OF ($634) AND ($8,253) TAXES, RESPECTIVELY			(886	)		(10,439	)
	LESS: RECLASSIFICATION ADJUSTMENT FOR GAINS/(LOSSES)INCLUDED IN NET INCOME, NET OF $353 AND ($1,415) TAXES, RESPECTIVELY			506			(2,639	)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES				(1,560	)		(6,634	)
COMPREHENSIVE INCOME			$	96,020		$	94,042

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Six Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$	264,186		$	279,790
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	INVESTMENT IN MARKETABLE EQUITY SECURITIES, NET OF ($245) AND ($279) TAXES, RESPECTIVELY			(348	)		(189	)
	MINIMUM PENSION LIABILITY ADJUSTMENTS, NET OF ($2,049) AND ($1,656) TAXES, RESPECTIVELY			(2,959	)		(2,055	)
	UNREALIZED GAINS/(LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES DUE TO CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE, NET OF $0 AND ($5,587) TAXES, RESPECTIVELY			-			(8,050	)
	UNREALIZED GAINS/(LOSSES) ON DERIVATIVES QUALIFIED AS HEDGES, NET OF $6,990 AND ($8,659) TAXES, RESPECTIVELY			9,971			(12,452	)
	LESS: RECLASSIFICATION ADJUSTMENT FOR GAINS/(LOSSES) INCLUDED IN NET INCOME, NET OF ($5,413) AND ($378) TAXES, RESPECTIVELY			(7,689	)		(713	)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES				14,353			(22,033	)
COMPREHENSIVE INCOME			$	278,539		$	257,757

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

					For the Six Months Ended June 30,
					2002			2001
					(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income				$	270,982		$	286,586
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
			Depreciation and amortization			242,569			271,866
			Income tax deferred (excluding taxes resulting from divestiture of plant)			94,713			(55,354	)
			Common equity component of allowance for funds used during construction			(6,121	)		(501	)
			Accrued pension credits			(170,900	)		(161,285	)
			Other non-cash charges			20,229			6,534
	CHANGES IN ASSETS AND LIABILITIES
			Accounts receivable—customer, less allowance for uncollectibles			(26,450	)		160,808
			Materials and supplies, including fuel and gas in storage			45,077			3,305
			Other receivables			(112,429	)		37,174
			Prepayments (other than pensions) and other current assets			(27,412	)		94,307
			Deferred recoverable energy costs			(92,012	)		85,048
			Cost of removal less salvage			(64,240	)		(44,570	)
			Accounts payable			103,997			(207,739	)
			Other-net			71,638			(76,880	)
NET CASH FLOWS FROM OPERATING ACTIVITIES						349,641			399,299
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
			Utility construction expenditures			(506,360	)		(448,215	)
			Nuclear fuel expenditures			-			(6,229	)
			Contributions to nuclear decommissioning trust			-			(10,650	)
			Common equity component of allowance for funds used during construction			6,121			501
			Divestiture of utility plant (net of federal income tax)			-			99,951
			Investments by unregulated subsidiaries			(468	)		(12,435	)
			Non-utility plant			(175,896	)		(37,728	)
NET CASH FLOWS USED IN INVESTING ACTIVITIES INCLUDING CONSTRUCTION						(676,603	)		(414,805	)
FINANCING ACTIVITIES INCLUDING DIVIDENDS
			Net proceeds from short-term debt			(45,001	)		(32,776	)
			Additions to long-term debt			625,000			624,600
			Retirement of long-term debt			(300,000	)		(150,000	)
			Issuance and refunding costs			(10,602	)		(14,846	)
			Funds held for refunding of NYSERDA Notes			-			(224,600	)
			Common stock dividends			(235,868	)		(233,271	)
			Issuance of common stock			32,076			-
			Preferred stock dividends			(6,796	)		(6,796	)
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES INCLUDING DIVIDENDS						58,809			(37,689	)
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS						(268,153	)		(53,195	)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1						341,179			94,828
CASH AND TEMPORARY CASH INVESTMENTS AT JUNE 30					$	73,026		$	41,633
LESS: RESTRICTED CASH						13,824			-
BALANCE: UNRESTRICTED CASH AND TEMPORARY CASH INVESTMENTS					$	59,202		$	41,633

The accompanying notes are an integral part of these financial statements.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CON EDISON

Note A - General

These footnotes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison, Inc. (Con Edison) and its subsidiaries, including the regulated utility Consolidated Edison Company of New York, Inc. (Con Edison of New York), the regulated utility Orange and Rockland Utilities, Inc. (O&R) and several non-utility subsidiaries. These financial statements are unaudited but, in the opinion of Con Edison's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison financial statements (including the notes thereto) included in the combined Con Edison, Con Edison of New York and O&R Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Earnings Per Common Share

For the three months ended June 30, 2002 and 2001, the weighted average number of shares used to calculate the diluted earnings per common share included dilutive common stock equivalents of approximately 1,174,209 shares and 439,901 shares, respectively. For the six months ended June 30, 2002 and 2001, the weighted average number of shares used to calculate the diluted earnings per common share included dilutive common stock equivalents of approximately 1,130,832 shares and 361,421 shares, respectively. Stock options to purchase 6.35 million and 5.34 million common shares for the three months and 6.39 million and 5.42 million common shares for the six months ended June 30, 2002 and 2001, respectively, were not included in the respective period's computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares. See "Earnings Per Common Share" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Note B - Environmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of Con Edison's utility subsidiaries and may be present in their facilities and equipment.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liabilities upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time they occurred.

At June 30, 2002, Con Edison had accrued $129 million as its best estimate of the utility subsidiaries' liability for sites as to which they have received process or notice alleging that hazardous substances generated by them (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability relating to these sites and other sites, the amount of which is not presently determinable but may be material to Con Edison's financial position, results of operations or liquidity.

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Con Edison's utility subsidiaries are permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect to hazardous waste. At June 30, 2002, $61.5 million of such costs had been deferred as regulatory assets.

Suits have been brought in New York State and federal courts against Con Edison's utility subsidiaries and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of the utility subsidiaries. The suits that have been resolved, which are many, have been resolved without any payment by the utility subsidiaries, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars but Con Edison believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to Con Edison at this time, these suits are not expected to have a material adverse effect on Con Edison's financial position, results of operations or liquidity. At June 30, 2002, the company had accrued an $8.7 million provision as its best estimate of liability for these suits and deferred a like amount as a regulatory asset.

Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to Con Edison at this time, these claims are not expected to have a material adverse effect on Con Edison's financial position, results of operations or liquidity. At June 30, 2002, Con Edison had accrued a $134 million provision as its best estimate of the utility subsidiaries' liability for workers' compensation claims, including those related to asbestos exposure. Of this amount $55.5 million was deferred as a regulatory asset.

Note C - Nuclear Generation

The New York State Public Service Commission (PSC) is investigating the February 2000 to January 2001 outage of the nuclear generating unit sold by Con Edison of New York in September 2001, its causes and the prudence of the company's actions regarding the operation and maintenance of the generating unit. The proceeding covers, among other things, Con Edison of New York's inspection practices, the circumstances surrounding prior outages, the basis for postponement of the unit's steam generator replacement and whether, and to what extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders.

Con Edison of New York has billed to customers replacement power costs for the outage incurred prior to August 2000 and after October 2000, but not approximately $90 million of replacement power costs incurred in August through October 2000. Con Edison of New York has also accrued a $40 million liability for the possible disallowance of replacement power costs that it had previously recovered from customers.

On June 5, 2002, the United States Court of Appeals for the Second Circuit unanimously affirmed the October 2000 decision by the United States District Court for the Northern District of New York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., in which the district court had determined that the New York State law that directed the PSC to prohibit Con Edison of New York from recovering replacement power costs for the outage from customers was unconstitutional and

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granted the company's motion for a permanent injunction to prevent its implementation. Unless extended by a Justice of the United States Supreme Court, defendants have 90 days from entry of the decision to seek a writ of certiorari to the Supreme Court.

The company is unable to predict whether or not any proceedings, lawsuits, legislation or other actions relating to the nuclear generating unit will have a material adverse effect on its financial position, results of operations or liquidity.

Note D - Northeast Utilities

In March 2001, Con Edison commenced an action in the United States District Court for the Southern District of New York, entitled Consolidated Edison, Inc. v. Northeast Utilities, seeking a declaratory judgment that Northeast Utilities has failed to meet certain conditions precedent to Con Edison's obligation to complete its acquisition of Northeast Utilities pursuant to their agreement and plan of merger, dated October 13, 1999, as amended and restated as of January 11, 2000 (the merger agreement). In May 2001 Con Edison amended its complaint. As amended, Con Edison's complaint seeks, among other things, recovery of damages sustained by it as a result of the material breach of the merger agreement by Northeast Utilities and the court's declaration that under the merger agreement Con Edison has no further or continuing obligations to Northeast Utilities, and that Northeast Utilities has no further or continuing rights against Con Edison.

In June 2001, Northeast Utilities withdrew the separate action it commenced in March 2001 in the same court and filed as a counter-claim to Con Edison's amended complaint its claim that Con Edison materially breached the merger agreement and that as a result Northeast Utilities and its shareholders have suffered substantial damages, including the difference between the consideration to be paid to Northeast Utilities shareholders pursuant to the merger agreement and the market value of Northeast Utilities common stock, expenditures in connection with regulatory approvals and lost business opportunities. Pursuant to the merger agreement, Con Edison had agreed to acquire Northeast Utilities for $26.00 per share (an estimated aggregate of not more than $3.9 billion) plus $0.0034 per share for each day after August 5, 2000 through the day prior to the completion of the transaction, payable 50 percent in cash and 50 percent in stock.

Con Edison believes that Northeast Utilities has materially breached the merger agreement, and that Con Edison has not materially breached the merger agreement. Con Edison believes it is not obligated to acquire Northeast Utilities because Northeast Utilities does not meet the merger agreement's conditions that Northeast Utilities perform all of its obligations under the merger agreement. Those obligations include the obligation that it carry on its businesses in the ordinary course consistent with past practice; that the representations and warranties made by it in the merger agreement were true and correct when made and remain true and correct; and that there be no material adverse change with respect to Northeast Utilities.

Both parties have filed motions for summary judgement. Con Edison is unable to predict whether or not any Northeast Utilities related lawsuits or other actions will have a material adverse effect on Con Edison's financial position, results of operations or liquidity.

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Note E - Leases

In accordance with SFAS No. 13 "Accounting for Leases" and related Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) issue statements, a 525 MW electric generating facility being developed under an operating lease arrangement by a Con Edison unregulated subsidiary in Newington, New Hampshire (the Newington Project) and the related lease obligations are not included in Con Edison's consolidated balance sheet.

In June 2002, the FASB issued an exposure draft of a proposed Interpretation on "Consolidation of Certain Special Purpose Entities" (SPEs). If the exposure draft were adopted in its current form, Con Edison would be required to include the Newington Project and the related lease obligations on its consolidated balance sheet. Con Edison estimates that this would result in a decrease in annual net income of approximately $4 million (after tax) and increases of approximately $350 million in non-utility plant and long-term debt.

Completion of construction of the Newington Project is now scheduled for later in 2002, and the company's unregulated subsidiary and the construction contractor are disputing whether the subsidiary is entitled to damages for a delay in completion and whether the contractor is entitled to additional project costs. Con Edison does not expect that this dispute will have a material adverse effect on its financial position, results of operations or liquidity.

As part of a broad initiative, the Internal Revenue Service is reviewing certain categories of transactions. Among these are transactions in which a taxpayer leases property and then immediately subleases it back to the lessor (termed "Lease In/Lease Out," or LILO transactions). In 1997 and 1999, Con Edison unregulated subsidiaries invested $93 million in two LILO transactions, involving gas distribution and electric generating facilities in the Netherlands.

For additional information, see Note J to financial statements included in the Form 10-K.

Note F - Derivative Instruments and Hedging Activities

As of January 2001 Con Edison adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison's subsidiaries use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity and gas (Hedges). As of June 30, 2002, the fair value of the derivatives for such use was $25.9 million, comprised of $15.5 million at the regulated utility subsidiaries and $10.4 million at the unregulated subsidiaries.

Con Edison's utility subsidiaries, pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," defer recognition in income of gains and losses on a Hedge until the underlying transaction is completed. Pursuant to rate provisions that permit the recovery of the cost of purchased power and gas, Con Edison's utility subsidiaries credit or charge to their customers gains or losses on

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Hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K.

To the extent SFAS No. 71 does not allow deferred recognition in income, Con Edison's utility subsidiaries have elected special hedge accounting pursuant to SFAS No. 133 (Cash Flow Hedge Accounting). Con Edison Solutions (which provides competitive gas and electric supply and energy-related products and services) has also elected Cash Flow Hedge Accounting. Con Edison Energy accounts for its trading activities in accordance with EITF No. 98-10 (see below).

Pursuant to Cash Flow Hedge Accounting, except as described in the following paragraph, the mark-to-market unrealized gain or loss on each Hedge is recorded in other comprehensive income and reclassified to income at the time the underlying transaction is completed. Upon adoption of SFAS No. 133, Con Edison's subsidiaries recognized after-tax transition gains of $1.7 million in other comprehensive income and $0.4 million in income. For the quarters ended June 30, 2002 and 2001, the company recognized in other comprehensive income unrealized after-tax net gains of $2.7 million and after-tax net losses of $12.7 million, respectively, relating to the subsidiaries' Hedges for which Cash Flow Hedge Accounting was used. For the six months ended June 30, 2002 and 2001, the company recognized in other comprehensive income unrealized after-tax net gains of $13.2 million and after-tax net losses of $12.3 million, respectively. The company reclassified to income from accumulated other comprehensive income after-tax net gains of $1.5 million for the second quarter of 2002, compared with after-tax net losses of $2.4 million for the second quarter of 2001. For the six months ended June 30, 2002 and 2001, the company reclassified to income from accumulated other comprehensive income after-tax net losses of $5.7 million and $0.5 million, respectively. These amounts, which were recognized in net income as fuel or purchased power costs, were largely offset by directionally opposite changes in the market value of the underlying commodities. As of June 30, 2002, the subsidiaries' Hedges for which Cash Flow Hedge Accounting was used were for a term of less than two years and $5.2 million of after-tax net gains relating to such Hedges were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

Under Cash Flow Hedge Accounting, any gain or loss relating to any portion of a Hedge determined to be "ineffective" is recognized in income in the period in which such determination is made. As a result, changes in the value of a Hedge may be recognized in income in an earlier period than the period in which the underlying transaction is recognized in income. The company expects, however, that these changes in values will be offset, at least in part, when the underlying transactions are recognized in income. For the second quarter of 2002, the company recognized in income mark-to-market unrealized pre-tax net gains of $3.4 million compared with unrealized pre-tax net losses of $8.9 million for the second quarter of 2001, relating to derivative transactions at Con Edison Solutions that were determined to be "ineffective." For the six months ended June 30, 2002 and 2001, with respect to such hedges, the company recognized in income mark-to-market unrealized pre-tax net gains of $6.5 million and pre-tax net losses of $9.9 million, respectively.

Con Edison Energy (which markets specialized energy supply services to wholesale customers) enters into over-the-counter and exchange traded contracts for the purchase and sale of electricity and installed

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capacity, gas or oil (which may provide for either physical or financial settlement) and is considered an "energy trading organization" required to account for such trading activities in accordance with FASB EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." With respect to such contracts entered into by Con Edison Energy, Con Edison recognized in income unrealized mark-to-market pre-tax net losses of $0.6 million and pre-tax net gains of $1.3 million for the second quarters of 2002 and 2001, respectively. For the six months ended June 30, 2002 and 2001, the company recognized in income unrealized mark-to-market pre-tax net gains of $3.8 million and $9.2 million, respectively. As of June 30, 2002, the fair value of the energy trading contracts was $15.0 million.

Interest Rate Hedging

O&R and Con Edison Development (which invests in and manages energy infrastructure projects) use Cash Flow Hedge Accounting for their interest rate swap agreements as described below. As of June 30, 2002, the fair value of the O&R interest rate swap was a loss of $15.4 million, and the fair value of the Con Edison Development interest rate swap was a loss of $6.7 million.

In connection with its $55 million promissory note issued to the New York State Energy Research and Development Authority for the net proceeds of the Authority's variable rate Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays interest at a fixed rate of 6.09 percent and is paid interest at the same variable rate as is paid on the 1994 Bonds. Upon adoption of SFAS No. 133, the company recognized in other comprehensive income after-tax transition adjustment losses relating to the swap agreement of $8.1 million. For the second quarter of 2002, the company recognized in other comprehensive income unrealized after-tax losses of $1.6 million compared with unrealized after-tax gains of $0.4 million for the second quarter of 2001. For the six months ended June 30, 2002 and 2001, the company recognized in other comprehensive income unrealized after-tax losses of $1.4 million and after-tax gains of $0.1 million, respectively. During the second quarters of 2002 and 2001, $0.4 million and $0.5 million, respectively, of after-tax losses were reclassified from accumulated other comprehensive income to income. For the six months ended June 30, 2002 and 2001, the company reclassified from accumulated other comprehensive income to income after-tax net losses of $0.8 million and $0.5 million, respectively. As of June 30, 2002, $1.1 million of after-tax losses relating to the swap agreement were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

In connection with $90 million of variable rate loans relating to the Lakewood electric generating plant, Con Edison Development has swap agreements pursuant to which it pays interest at a fixed rate of 6.68 percent and is paid interest at a variable rate equal to the three-month London Interbank Offered Rate. Upon adoption of SFAS No. 133, the company recognized in other comprehensive income after-tax transition adjustment losses relating to the swap agreements of $1.6 million. For the second quarter of 2002, the company recognized in other comprehensive income unrealized after-tax losses of $1.9 million compared with unrealized after-tax gains of $1.8 million for the second quarter of 2001. For the six months ended June 30, 2002 and 2001, the company recognized in other comprehensive income unrealized after-tax losses of $1.8 million and $0.2 million, respectively. During the second quarter of

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2002 and 2001, $0.6 million after-tax losses and $0.3 million after-tax gains, respectively, were reclassified from accumulated other comprehensive income to income. For the six months ended June 30, 2002 and 2001, $1.2 million after-tax losses and $0.3 million of after-tax gains, respectively, were reclassified from accumulated other comprehensive income to income. As of June 30, 2002, $2.3 million of after-tax losses relating to the swap agreements were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

Comprehensive Income

Unrealized gains/(losses) on derivatives, net of tax, included in accumulated other comprehensive income for the three months ended June 30, 2002 and 2001 were as follows:

		Three Months Ended
		June 30, 2002			June 30, 2001
		(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle net of $0 and $1.2 taxes		$	-		$	0.9
Unrealized gains/(losses) on derivatives qualified as hedges, net of ($0.6) and ($7.6) taxes			(0.9	)		(10.4	)
Less: Reclassification adjustment for gains/(losses) included in net income, net of $0.4 and ($1.6) taxes			0.5			(2.6	)
Unrealized gains/(losses) on derivatives qualified as hedges for the period		$	(1.4	)	$	(6.9	)

Unrealized gains/(losses) on derivatives, net of tax, included in accumulated other comprehensive income for the six months ended June 30, 2002 and 2001 were as follows:

		Six Months Ended
		June 30, 2002			June 30, 2001
		(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $0 and ($5.6) taxes		$	-		$	(8.0	)
Unrealized gains/(losses) on derivatives qualified as hedges, net of $7.0 and ($8.7) taxes			10.0			(12.5	)
Less: Reclassification adjustment for gains/(losses) included in net income, net of ($5.4) and ($0.4) taxes			(7.7	)		(0.7	)
Unrealized gains/(losses) on derivatives qualified as hedges for the period		$	17.7		$	(19.8	)

Note G - Financial Information by Business Segment

Con Edison's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirements. Con Edison's principal business segments are:

•

Regulated Electric - consists of regulated utility activities of Con Edison of New York and O&R relating to the generation, transmission and distribution of electricity in New York, New Jersey and Pennsylvania.


•

Regulated Gas - consists of regulated utility activities of Con Edison of New York and O&R relating to the transportation, storage and distribution of natural gas in New York and Pennsylvania.

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•

Regulated Steam - consists of regulated utility activities of Con Edison of New York relating to the generation and distribution of steam in New York.


•

Unregulated subsidiaries - represents the operations of the competitive electric and gas supply and energy-related products and services businesses and the operations of the affiliates that invest in energy infrastructure and telecommunications projects.


•

Other - - includes the operations of the parent company, Con Edison, and consolidation adjustments.

All revenues of Con Edison's business segments, excluding revenues earned by an unregulated subsidiary on certain energy infrastructure projects, which are deemed to be immaterial, are from customers located in the United States. Also, all assets, excluding certain investments in energy infrastructure projects by an unregulated subsidiary, are located in the United States and are materially consistent with segment assets as disclosed in the Form 10-K. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Common services shared by the business segments (shared services) are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

The financial data for business segments are as follows:

CONSOLIDATED EDISON, INC.
SEGMENT FINANCIAL INFORMATION
$000'S

FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

		Regulated Electric						Regulated Steam
		2002			2001			2002			2001
Operating revenues		$	1,400,045		$	1,531,949		$	70,488		$	89,666
Intersegment revenues			2,617			3,213			429			485
Depreciation and amortization			93,599			107,153			4,571			4,431
Operating income		$	183,365		$	183,986		$	(4,280	)	$	(5,422	)

		Regulated Gas						Unregulated Subsidiaries & Other
		2002			2001			2002			2001
Operating revenues		$	242,355		$	305,394		$	187,351		$	185,206
Intersegment revenues			839			872			10,262			2,830
Depreciation and amortization			19,073			18,016			4,883			7,182
Operating income		$	19,269		$	30,240		$	1,664		$	7,018

		Total
		2002			2001
Operating revenues		$	1,900,239		$	2,112,215
Intersegment revenues			14,147			7,400
Depreciation and amortization			122,126			136,782
Operating income		$	200,018		$	215,822

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FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

		Regulated Electric						Regulated Steam
		2002			2001			2002			2001
Operating revenues		$	2,700,893		$	3,239,323		$	211,954		$	347,918
Intersegment revenues			4,433			6,742			905			951
Depreciation and amortization			186,070			213,252			9,135			8,836
Operating income		$	307,629		$	333,117		$	22,386		$	34,452

		Regulated Gas						Unregulated Subsidiaries & Other
		2002			2001			2002			2001
Operating revenues		$	716,219		$	1,007,213		$	370,312		$	404,024
Intersegment revenues			1,635			1,591			18,282			5,166
Depreciation and amortization			37,921			35,757			9,443			14,021
Operating income		$	116,718		$	128,170		$	10,706		$	6,575

		Total
		2002			2001
Operating revenues		$	3,999,378		$	4,998,478
Intersegment revenues			25,255			14,450
Depreciation and amortization			242,569			271,866
Operating income		$	457,439		$	502,314

Note H - New Financial Accounting Standards

On January 1, 2002, Con Edison adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value of the assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets will continue to be amortized over their useful lives. The goodwill impairment test is a two-step process. The first step identifies potential impairments by comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. If the fair value is less than the carrying amount, the second step of the impairment test is performed. The second step compares the implied fair value determined in the same manner as the amount of goodwill recognized in a business combination pursuant to SFAS No. 141, "Business Combination," to its carrying amount to determine the amount of the impairment, if any.

Con Edison currently has $439.9 million of recorded goodwill relating to the 1999 acquisition of O&R and certain generating assets owned by Con Edison Development. The company completed the first step of the goodwill impairment test, which indicated that the $34.1 million (approximately $20 million after tax) of goodwill related to Con Edison Development is impaired. Con Edison will complete the second step of the impairment test before the end of the year and will recognize any impairment charge as a cumulative effect of a change in accounting principle at January 1, 2002. There is no impairment of the $405.8 million of goodwill related to the acquisition of O&R.

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Had Con Edison been accounting for goodwill under SFAS No. 142 for all periods presented, its net income and earnings per share would have been as follows:

			Three months ended June 30,						Six months ended June 30,
			2002			2001			2002			2001
			(Millions of dollars, except per share data)
Reported net income			$	97.6		$	100.7		$	264.2		$	279.8
Add back: goodwill amortization (net of tax)				-			2.7			-			5.8
Adjusted net income			$	97.6		$	103.4		$	264.2		$	285.6
Basic and diluted earnings per share:
	Reported		$	0.46		$	0.48		$	1.24		$	1.32
	Goodwill amortization (net of tax)			-			0.01			-			0.03
	Adjusted		$	0.46		$	0.49		$	1.24		$	1.35

Con Edison's definite life intangible asset relates to a power purchase agreement of an unregulated subsidiary, and is being amortized on a straight-line basis over its 25-year contract period. At June 30, 2002, the gross carrying amount and accumulated amortization were $91.7 million and $7.8 million, respectively. Amortization expense was $1.9 million for the six months ended June 30, 2002, and is estimated to be $3.7 million per year from 2002 to 2006.

In June 2002, the EITF discussed EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." The Task Force reached a final consensus that revenue resulting from energy trading contracts, whether realized or unrealized and whether financially or physically settled, should be shown net in the income statement. The consensus also expanded disclosure requirements for energy trading activities. The new ruling, which applies to Con Edison Energy, is effective for periods ending after July 2002 with reclassification of prior period amounts required. The reclassification will reduce Con Edison's non-utility revenues and costs for purchased power and gas by $245 million in 2001 and $114 million in 2000 (about 2.5 percent and 1.2 percent, respectively, of Con Edison's total operating revenues in those years). For the six-month period ended June 30, 2002, revenues and costs will be reduced by $104 million (2.6 percent of Con Edison's total operating revenues). The adoption of EITF Issue No. 02-3 will have no material impact on Con Edison's consolidated financial position or results of operations.

SFAS No. 143, "Accounting for Asset Retirement Obligations," which Con Edison is required to adopt on January 1, 2003, requires entities to record the fair value of a liability associated with an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity will capitalize the cost by increasing the amount of the related asset. The liability will be increased to its present value each period and the capitalized cost will be depreciated over the useful life of the related asset. Upon retirement of the asset, the entity will settle the obligation for the amount recorded or incur a gain or loss. Con Edison has not yet determined the impact of this standard on its consolidated financial position or results of operations.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which Con Edison adopted on January 1, 2002, replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets

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held for sale or meeting other specified criteria be measured at the lower of book value or fair value less cost to sell. The standard also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on Con Edison's consolidated financial position or results of operations.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements." The provisions of this section are effective January 1, 2003. Con Edison does not expect that adoption of the standard will have a material adverse effect on its consolidated financial position or results of operations.

This Statement also amends SFAS No. 13, "Accounting for Leases," to require sale-leaseback accounting for certain lease modifications that have economic impact similar to sale-leaseback transactions and amends certain other authoritative pronouncements. These provisions of SFAS No. 145, adopted in May 2002, had no impact on Con Edison's consolidated financial position or results of operations.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which Con Edison is required to adopt on January 1, 2003, requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Con Edison does not expect that adoption of the standard will have a material adverse effect on its consolidated financial position or results of operations.

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Consolidated Edison of New York, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

					As at
					June 30, 2002			December 31, 2001
					(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric				$	10,618,480		$	10,441,779
	Gas					2,147,474			2,113,664
	Steam					760,053			758,600
	General					1,313,442			1,241,746
	Total					14,839,449			14,555,789
	Less: Accumulated depreciation					4,178,523			4,083,760
	Net					10,660,926			10,472,029
	Construction work in progress					748,970			626,835
NET UTILITY PLANT						11,409,896			11,098,864
NON-UTILITY PLANT
	Non-utility property					25,001			29,408
NET PLANT						11,434,897			11,128,272
CURRENT ASSETS
	Cash and temporary cash investments					33,957			264,776
	Accounts receivable — customer, less allowance for uncollectible accounts of $28,287 and $29,400 in 2002 and 2001, respectively					531,763			527,635
	Other receivables					185,093			63,885
	Accounts receivable from affiliated companies					42,367			27,929
	Fuel, at average cost					11,701			16,719
	Gas in storage, at average cost					54,871			85,534
	Materials and supplies, at average cost					82,737			82,301
	Prepayments					44,986			58,628
	Other current assets					34,767			33,247
TOTAL CURRENT ASSETS						1,022,242			1,160,654
INVESTMENTS
	Other					5,325			4,950
TOTAL INVESTMENTS						5,325			4,950
DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
	Accrued pension credits					868,706			697,807
	Regulatory assets
			Future federal income tax			574,131			624,625
			Sale of nuclear generating unit			124,463			170,241
			Recoverable energy costs			218,409			121,748
			Real estate sale costs — First Avenue properties			106,917			105,407
			Workers' compensation			55,453			60,466
			Divestiture — capacity replacement reconciliation			58,850			58,850
			Accrued unbilled gas revenue			43,594			43,594
			Deferred special retirement program costs			39,918			42,197
			Deferred revenue taxes			47,968			34,404
			World Trade Center restoration costs			34,975			32,933
			Other			101,815			83,180
	TOTAL REGULATORY ASSETS					1,406,493			1,377,645
	Other deferred charges and noncurrent assets					175,125			149,490
TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS						2,450,324			2,224,942
TOTAL					$	14,912,788		$	14,518,818

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison of New York, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

					As at
					June 30, 2002			December 31, 2001
					(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock				$	1,482,341		$	1,482,341
	Repurchased Consolidated Edison, Inc. common stock					(962,092	)		(962,092	)
	Retained earnings					4,241,232			4,185,575
	Capital stock expense					(35,412	)		(35,547	)
	Accumulated other comprehensive income					(4,566	)		(4,472	)
			TOTAL COMMON SHAREHOLDERS' EQUITY			4,721,503			4,665,805
	Preferred stock
			$5 Cumulative Preferred			175,000			175,000
			4.65% Series C			15,330			15,330
			4.65% Series D			22,233			22,233
			TOTAL PREFERRED STOCK			212,563			212,563
	Long-term debt					5,161,291			5,011,752
TOTAL CAPITALIZATION						10,095,357			9,890,120
NONCURRENT LIABILITIES
	Obligations under capital leases					39,801			41,088
	Accumulated provision for injuries and damages					168,086			163,632
	Pension and benefits reserve					138,992			101,759
	Other noncurrent liabilities					12,187			12,187
TOTAL NONCURRENT LIABILITIES						359,066			318,666
CURRENT LIABILITIES
	Long-term debt due within one year					150,000			300,000
	Preferred stock to be redeemed in one year					37,050			37,050
	Notes payable					84,000			–
	Accounts payable					630,785			589,696
	Accounts payable to affiliated companies					24,491			8,441
	Customer deposits					206,826			204,873
	Accrued taxes					88,734			141,259
	Accrued interest					68,570			73,311
	Accrued wages					70,769			71,177
	Other current liabilities					267,796			270,109
TOTAL CURRENT LIABILITIES						1,629,021			1,695,916
DEFERRED CREDITS AND REGULATORY LIABILITIES
	Accumulated deferred federal income tax					2,122,795			2,022,638
	Accumulated deferred investment tax credits					108,867			111,925
	Regulatory liabilities
			NYISO reconciliation			102,471			92,504
			World Trade Center casualty loss			78,787			81,483
			Gain on divestiture			36,806			52,784
			Deposit from sale of First Avenue properties			50,000			50,000
			Accrued electric rate reduction			38,018			38,018
			DC service incentive			32,869			28,455
			Transmission Congestion Contracts			78,757			4,896
			Gas Rate Plan–World Trade Center Recovery			36,388			–
			Other			143,586			131,413
	TOTAL REGULATORY LIABILITIES					597,682			479,553
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES						2,829,344			2,614,116
TOTAL					$	14,912,788		$	14,518,818

The accompanying notes are an integral part of these financial statements.

23

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Consolidated Edison Of New York, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

			For the Three Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
OPERATING REVENUES
	Electric		$	1,282,627		$	1,396,411
	Gas			215,107			269,327
	Steam			70,488			89,666
TOTAL OPERATING REVENUES				1,568,222			1,755,404
OPERATING EXPENSES
	Purchased power			560,292			593,956
	Fuel			40,677			46,020
	Gas purchased for resale			96,666			133,476
	Other operations			177,219			228,890
	Maintenance			92,463			109,960
	Depreciation and amortization			108,751			121,526
	Taxes, other than income taxes			251,305			238,736
	Income taxes			55,076			83,692
TOTAL OPERATING EXPENSES				1,382,449			1,556,256
OPERATING INCOME				185,773			199,148
OTHER INCOME (DEDUCTIONS)
	Investment income			39			118
	Allowance for equity funds used during construction			1,915			258
	Other income less miscellaneous deductions			1,866			1,796
	Income taxes			999			(514	)
TOTAL OTHER INCOME (DEDUCTIONS)				4,819			1,658
INCOME BEFORE INTEREST CHARGES				190,592			200,806
	Interest on long-term debt			84,441			88,817
	Other interest			7,129			7,085
	Allowance for borrowed funds used during construction			(1,575	)		(1,388	)
NET INTEREST CHARGES				89,995			94,514
NET INCOME				100,597			106,292
PREFERRED STOCK DIVIDEND REQUIREMENTS				3,398			3,398
NET INCOME FOR COMMON STOCK			$	97,199		$	102,894

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Of New York, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

			For the Six Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
OPERATING REVENUES
	Electric		$	2,491,384		$	2,979,610
	Gas			623,949			866,768
	Steam			211,954			347,918
TOTAL OPERATING REVENUES				3,327,287			4,194,296
OPERATING EXPENSES
	Purchased power			1,115,864			1,375,943
	Fuel			101,536			216,335
	Gas purchased for resale			277,093			498,504
	Other operations			364,512			444,187
	Maintenance			186,414			231,174
	Depreciation and amortization			216,174			241,527
	Taxes, other than income taxes			500,224			526,931
	Income taxes			149,953			192,927
TOTAL OPERATING EXPENSES				2,911,770			3,727,528
OPERATING INCOME				415,517			466,768
OTHER INCOME (DEDUCTIONS)
	Investment income			101			274
	Allowance for equity funds used during construction			6,121			501
	Other income less miscellaneous deductions			3,266			624
	Income taxes			13,133			4,121
TOTAL OTHER INCOME (DEDUCTIONS)				22,621			5,520
INCOME BEFORE INTEREST CHARGES				438,138			472,288
	Interest on long-term debt			169,355			178,494
	Other interest			15,717			14,979
	Allowance for borrowed funds used during construction			(1,584	)		(2,695	)
NET INTEREST CHARGES				183,488			190,778
NET INCOME				254,650			281,510
PREFERRED STOCK DIVIDEND REQUIREMENTS				6,796			6,796
NET INCOME FOR COMMON STOCK			$	247,854		$	274,714

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

			As at
			June 30, 2002			December 31, 2001
			(Thousands of Dollars)
BALANCE, JANUARY 1			$	4,185,575		$	3,995,825
	Net income for the period			254,650			663,061
TOTAL				4,440,225			4,658,886
DIVIDENDS DECLARED ON CAPITAL STOCK
	Cumulative preferred, at required annual rates			6,796			13,593
	Common			192,197			459,718
TOTAL DIVIDENDS DECLARED				198,993			473,311
BALANCE AT END OF PERIOD			$	4,241,232		$	4,185,575

Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Three Months Ended June 30,
			2002		2001
			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$97,199		$102,894
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Minimum pension liability adjustments, net of $0 and $294 taxes, respectively		–		294
	Unrealized gains/(losses) on derivatives qualified as hedges, net of $226 and ($1,757) taxes, respectively		326		(2,509	)
	Less: Reclassification adjustment for gains/(losses) included in net income, net of $116 and ($288) taxes, respectively		167		(412	)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES			159		(1,803	)
COMPREHENSIVE INCOME			$97,358		$101,091

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Six Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$	247,854		$	274,714
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Minimum pension liability adjustments, net of ($1,882) and ($1,593) taxes, respectively			(2,721	)		(2,118	)
	Unrealized gains/(losses) on derivatives qualified as hedges, net of $1,899 and ($1,757) taxes, respectively			2,724			(2,509	)
	Less: Reclassification adjustment for gains/(losses) included in net income, net of $66 and ($288) taxes, respectively			97			(412	)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES				(94	)		(4,215	)
COMPREHENSIVE INCOME			$	247,760		$	270,499

The accompanying notes are an integral part of these financial statements.

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Consolidated Edison Company of New York, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

					For the Six Months Ended June 30,
					2002			2001
					(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income				$	254,650		$	281,510
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
			Depreciation and amortization			216,174			241,527
			Income tax deferred (excluding taxes resulting from divestiture of plant)			85,606			(71,248	)
			Common equity component of allowance for funds used during construction			(6,121	)		(501	)
			Accrued pension credits			(170,899	)		(161,285	)
			Other non-cash charges			8,402			24,423
	CHANGES IN ASSETS AND LIABILITIES
			Accounts receivable - customer, less allowance for uncollectibles			(4,127	)		131,339
			Materials and supplies, including fuel and gas in storage			35,245			4,348
			Other receivables			(121,208	)		16,434
			Prepayments (other than pensions) and other current assets			13,734			64,240
			Deferred recoverable energy costs			(96,661	)		81,742
			Cost of removal less salvage			(63,449	)		(43,894	)
			Accounts payable			41,089			(200,316	)
			Other-net			176,133			13,415
NET CASH FLOWS FROM OPERATING ACTIVITIES						368,568			381,734
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
			Construction expenditures			(490,167	)		(456,045	)
			Nuclear fuel expenditures			-			(6,229	)
			Contributions to nuclear decommissioning trust			-			(10,650	)
			Divestiture of utility plant (net of federal income tax)			-			99,951
			Common equity component of allowance for funds used during construction			6,121			501
NET CASH FLOWS USED IN INVESTING ACTIVITIES INCLUDING CONSTRUCTION						(484,046	)		(372,472	)
FINANCING ACTIVITIES INCLUDING DIVIDENDS
			Net proceeds from short-term debt			84,000			(36,772	)
			Additions to long-term debt			300,000			624,600
			Retirement of long-term debt			(300,000	)		(150,000	)
			Funds held for refunding NYSERDA Notes			-			(224,600	)
			Issuance and refunding costs			(348	)		(14,846	)
			Common stock dividends			(192,197	)		(233,271	)
			Preferred stock dividends			(6,796	)		(6,796	)
NET CASH FLOWS USED IN FINANCING ACTIVITIES INCLUDING DIVIDENDS						(115,341	)		(41,685	)
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS						(230,819	)		(32,423	)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1						264,776			70,273
CASH AND TEMPORARY CASH INVESTMENTS AT JUNE 30					$	33,957		$	37,850

The accompanying notes are an integral part of these financial statements.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -
CON EDISON OF NEW YORK

Note A - General

These footnotes accompany and form an integral part of the interim consolidated financial statements of Consolidated Edison Company of New York, Inc. (Con Edison of New York) and its subsidiaries. Consolidated Edison, Inc. (Con Edison) owns all of the outstanding common stock of Con Edison of New York. These financial statements are unaudited but, in the opinion of Con Edison of New York's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited Con Edison of New York financial statements (including the notes thereto) included in the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Note B - Environmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of Con Edison of New York and may be present in its facilities and equipment.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liabilities, upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time they occurred.

At June 30, 2002, Con Edison of New York had accrued $92.2 million as its best estimate of its liability for sites as to which it has received process or notice alleging that hazardous substances generated by Con Edison of New York (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability relating to these sites and other sites, the amount of which is not presently determinable but may be material to Con Edison of New York's financial position, results of operations or liquidity.

Under Con Edison of New York's current electric, gas and steam rate agreements, site investigation and remediation costs in excess of $5 million annually incurred with respect to hazardous waste for which it is responsible are to be deferred and subsequently reflected in rates. At June 30, 2002, $22.1 million of such costs had been deferred as regulatory assets.

Suits have been brought in New York State and federal courts against Con Edison of New York and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of Con Edison of New York. The suits that have been resolved, which are many, have been resolved without any payment by Con Edison of New York, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars, but Con Edison of

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New York believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to Con Edison of New York at this time, these suits are not expected to have a material adverse effect on its financial position, results of operations or liquidity. At June 30, 2002, Con Edison of New York had accrued an $8.7 million provision as its best estimate of its liability for these suits and deferred a like amount as a regulatory asset.

Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits based upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to Con Edison of New York at this time, these claims are not expected to have a material adverse effect on its financial position, results of operations or liquidity. At June 30, 2002, Con Edison of New York had accrued a $128.5 million provision as its best estimate of its liability for workers' compensation claims, including those related to asbestos exposure. Of this amount, $55.5 million was deferred as a regulatory asset.

Note C - Nuclear Generation

The New York State Public Service Commission (PSC) is investigating the February 2000 to January 2001 outage of the nuclear generating unit sold by Con Edison of New York in September 2001, its causes and the prudence of the company's actions regarding the operation and maintenance of the generating unit. The proceeding covers, among other things, Con Edison of New York's inspection practices, the circumstances surrounding prior outages, the basis for postponement of the unit's steam generator replacement and whether, and to what extent, increased replacement power costs and repair and replacement costs should be borne by Con Edison's shareholders.

Con Edison of New York has billed to customers replacement power costs for the outage incurred prior to August 2000 and after October 2000, but not approximately $90 million of replacement power costs incurred in August through October 2000. Con Edison of New York has also accrued a $40 million liability for the possible disallowance of replacement power costs that it had previously recovered from customers.

On June 5, 2002, the United States Court of Appeals for the Second Circuit unanimously affirmed the October 2000 decision by the United States District Court for the Northern District of New York, in an action entitled Consolidated Edison Company of New York, Inc. v. Pataki, et al., in which the district court had determined that the New York State law that directed the PSC to prohibit Con Edison of New York from recovering replacement power costs for the outage from customers was unconstitutional and granted the company's motion for a permanent injunction to prevent its implementation. Unless extended by a Justice of the United States Supreme Court, defendants have 90 days from entry of the decision to seek a writ of certiorari to the Supreme Court.

The company is unable to predict whether or not any proceedings, lawsuits, legislation or other actions relating to the nuclear generating unit will have a material adverse effect on its financial position, results of operations or liquidity.

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Note D - Derivative Instruments and Hedging Activities

As of January 2001 Con Edison of New York adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

Energy Price Hedging

Con Edison of New York uses derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity and gas (Hedges). As of June 30, 2002, the fair value of the derivatives for such use was $16.1 million.

Pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," Con Edison of New York defers recognition in income of gains and losses on a Hedge until the underlying transaction is completed. In accordance with rate provisions that permit the recovery of the cost of purchased power and gas, Con Edison of New York credits or charges to its customers gains or losses on Hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K. To the extent SFAS No. 71 does not allow deferred recognition in income, Con Edison of New York has elected special hedge accounting under SFAS No. 133 (Cash Flow Hedge Accounting).

Pursuant to Cash Flow Hedge Accounting, the mark-to-market unrealized gain or loss on each Hedge is recorded in other comprehensive income and reclassified to income at the time the underlying transaction is completed (except that any gain or loss relating to any portion of a Hedge determined to be "ineffective" is recognized in income in the period in which such determination is made).

Upon adoption of SFAS No. 133, Con Edison of New York had no transition adjustments to recognize in other comprehensive income. For the quarters ended June 30, 2002 and 2001, Con Edison of New York recognized in other comprehensive income unrealized after-tax net gains of $0.3 million and after-tax net losses of $2.5 million, respectively. For the six months ended June 30, 2002 and 2001, Con Edison of New York recognized in other comprehensive unrealized after-tax net gains of $2.7 million and after-tax net losses of $2.5 million, respectively. For the quarters ended June 30, 2002 and 2001, Con Edison of New York reclassified to income from accumulated other comprehensive income after-tax net gains relating to Hedges of $0.2 million and after-tax net losses of $0.4 million, respectively. For the six months ended June 30, 2002 and 2001, Con Edison of New York reclassified to income from accumulated other comprehensive income after-tax net gains relating to Hedges of $0.1 million and after-tax net losses of $0.4 million. As of June 30, 2002, $0.7 million of after-tax net gains relating to Hedges were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

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Comprehensive Income

Unrealized gains/(losses) on derivatives, net of tax, included in accumulated other comprehensive income for the three months ended June 30, 2002 and 2001 were as follows:

		Three Months Ended
		June 30, 2002			June 30, 2001
		(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges, net of $0.2 and ($1.8) taxes		$	0.3		$	(2.5	)
Less: Reclassification adjustment for (gains)/losses included in net income, net of $0.1 and ($0.3) taxes			0.2			(0.4	)
Unrealized gains/(losses) on derivatives qualified as hedges for the period		$	0.1		$	(2.1	)

Unrealized gains/(losses) on derivatives, net of tax, included in accumulated other comprehensive income for the six months ended June 30, 2002 and 2001 were as follows:

		Six Months Ended
		June 30, 2002			June 30, 2001
		(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges, net of $1.9 and ($1.8) taxes		$	2.7		$	(2.5	)
Less: Reclassification adjustment for (gains)/losses included in net income, net of $0.1 and ($0.3) taxes			0.1			(0.4	)
Unrealized gains/(losses) on derivatives qualified as hedges for the period		$	2.6		$	(2.1	)

Note E - Financial Information by Business Segment

Con Edison of New York's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirements. Con Edison of New York's principal business segments are:

•

Regulated Electric - consists of regulated utility activities relating to the generation, transmission and distribution of electricity in New York.



•

Regulated Gas - consists of regulated utility activities relating to the transportation, storage and distribution of natural gas in New York.



•

Regulated Steam - consists of regulated utility activities relating to the generation and distribution of steam in New York.

All revenues of Con Edison of New York's business segments are from customers located in the United States. Also, all assets are located in the United States and are materially consistent with segment assets as disclosed in the Form 10-K.

Common services shared by the business segments (shared services) are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

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The financial data for business segments are as follows:

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
SEGMENT FINANCIAL INFORMATION
$000'S

FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

		Regulated Electric						Regulated Steam
		2002			2001			2002			2001
Operating revenues		$	1,282,627		$	1,396,411		$	70,488		$	89,666
Intersegment revenues			2,648			3,195			429			485
Depreciation and amortization			87,144			101,150			4,571			4,431
Operating income		$	170,739		$	173,358		$	(4,280	)	$	(5,422	)

		Regulated Gas						Total
		2002			2001			2002			2001
Operating revenues		$	215,107		$	269,327		$	1,568,222		$	1,755,404
Intersegment revenues			839			872			3,916			4,552
Depreciation and amortization			17,036			15,945			108,751			121,526
Operating income		$	19,314		$	31,212		$	185,773		$	199,148

FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

		Regulated Electric						Regulated Steam
		2002			2001			2002			2001
Operating revenues		$	2,491,384		$	2,979,610		$	211,954		$	347,918
Intersegment revenues			5,577			5,858			905			951
Depreciation and amortization			173,185			201,065			9,135			8,836
Operating income		$	286,840		$	313,606		$	22,386		$	34,452

		Regulated Gas						Total
		2002			2001			2002			2001
Operating revenues		$	623,949		$	866,768		$	3,327,287		$	4,194,296
Intersegment revenues			1,635			1,591			8,117			8,400
Depreciation and amortization			33,854			31,626			216,174			241,527
Operating income		$	106,291		$	118,710		$	415,517		$	466,768

Note F - New Financial Accounting Standards

On January 1, 2002, Con Edison of New York adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value of assets of business acquired) and intangible assets with indefinite useful lives shall no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets will continue to be amortized over their useful lives. The adoption of SFAS No. 142 had no impact on Con Edison of New York's consolidated financial position or results of operations.

In June 2002, The Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) discussed EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk

33

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Management Activities." The Task Force reached a final consensus ruling that the revenue resulting from energy trading contracts, whether realized or unrealized and whether financially or physically settled, should be shown net in the income statement. The consensus also expanded disclosure requirements for energy trading activities. The new ruling is effective for periods ending after July 2002 with reclassification of prior period amounts required. The adoption of EITF Issue No. 02-3 will have no impact on Con Edison of New York's consolidated financial position or results of operations.

SFAS No. 143, "Accounting for Asset Retirement Obligations," which Con Edison of New York is required to adopt on January 1, 2003, requires entities to record the fair value of a liability associated with an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity will capitalize the cost by increasing the carrying amount of the related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the entity settles the obligation for the amount recorded or incurs a gain or loss. Con Edison of New York has not yet determined the impact of this standard on its consolidated financial position or results of operations.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which Con Edison of New York adopted on January 1, 2002, replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for sale be measured at the lower of book value or fair value less cost to sell. The standard also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on Con Edison of New York's consolidated financial position or results of operations.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements." The provisions of this section are effective January 1, 2003. Con Edison of New York does not expect that adoption of the standard will have a material adverse effect on its consolidated financial position or results of operations.

This Statement also amends SFAS No. 13, "Accounting for Leases," to require sale-leaseback accounting for certain lease modifications that have economic impact similar to sale-leaseback transactions and amends certain other authoritative pronouncements. These provisions of SFAS No. 145, adopted in May 2002, had no impact on Con Edison of New York's consolidated financial position or results of operations.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which Con Edison of New York is required to adopt on January 1, 2003, requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Con Edison of New York does not expect that adoption of the standard will have a material adverse effect on its consolidated financial position or results of operations.

34

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Orange and Rockland Utilities, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

					As At
					June 30, 2002			December 31, 2001
					(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
	Electric				$	717,224		$	703,621
	Gas					296,665			292,066
	Common					112,254			112,353
	TOTAL					1,126,143			1,108,040
	Less: Accumulated depreciation					397,901			389,234
	NET					728,242			718,806
	Construction work in progress					21,773			27,271
NET UTILITY PLANT						750,015			746,077
NON-UTILITY PLANT
	Non-utility property, less accumulated depreciation of $2,054 and $2,399 in 2002 and 2001, respectively					2,542			2,621
NET PLANT						752,557			748,698
CURRENT ASSETS
	Cash and cash equivalents					10,511			1,785
	Customer accounts receivable, less allowance for uncollectable accounts of $2,637 and $2,625					37,408			44,371
	Other accounts receivable, less allowance for uncollectable accounts of $1,070 and $860					4,510			5,166
	Accrued utility revenue					19,557			20,655
	Gas in storage, at average cost					13,718			21,227
	Materials and supplies, at average cost					5,549			5,563
	Prepayments					17,740			17,776
	Other current assets					10,330			11,532
TOTAL CURRENT ASSETS						119,323			128,075
DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS
	Regulatory assets
			Recoverable fuel costs			83,866			87,514
			Deferred pension and other postretirement benefits			42,991			39,599
			Deferred environmental remediation costs			39,366			40,474
			Future federal income tax			36,145			35,266
			Other regulatory assets			31,869			28,808
			Deferred revenue taxes			7,001			6,852
			Hedges on energy trading			650			1,002
	TOTAL REGULATORY ASSETS					241,888			239,515
	Other deferred charges and noncurrent assets					16,150			19,052
TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS						258,038			258,567
TOTAL					$	1,129,918		$	1,135,340

The accompanying notes are an integral part of these financial statements.

35

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Orange and Rockland Utilities, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

					As At
					June 30, 2002			December 31, 2001
					(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
	Common stock				$	5		$	5
	Additional paid in capital					194,499			194,499
	Retained earnings					157,312			151,792
	Accumulated comprehensive income					(12,147	)		(10,905	)
			TOTAL COMMON SHAREHOLDERS' EQUITY			339,669			335,391
	Long-term debt					300,830			335,771
TOTAL CAPITALIZATION						640,499			671,162
NONCURRENT LIABILITIES
	Pension and benefit reserve					94,807			85,607
	Other noncurrent liabilities					19,485			18,619
TOTAL NONCURRENT LIABILITIES						114,292			104,226
CURRENT LIABILITIES
	Long term debt due within one year					35,000			-
	Notes payable					-			16,600
	Accounts payable					49,112			52,818
	Accounts payable to affiliated companies					2,340			3,113
	Accrued federal income and other taxes					3,255			3,302
	Customer deposits					9,743			9,248
	Accrued interest					7,525			6,968
	Accrued environmental costs					37,809			38,417
	Other current liabilities					5,203			6,878
TOTAL CURRENT LIABILITIES						149,987			137,344
DEFERRED CREDITS AND REGULATORY LIABILITIES
ACCUMULATED DEFERRED FEDERAL INCOME TAX						126,385			125,108
DEFERRED INVESTMENT TAX CREDITS						6,184			6,425
	Regulatory liabilities
			Pension and other benefits			3,180			6,173
			Recoverable energy costs			46,408			45,008
			Competition enhancement fund			10,137			10,149
			Gain on divestiture			5,376			6,246
			Other regulatory liabilities			11,885			8,998
	TOTAL REGULATORY LIABILITIES					76,986			76,574
			Deferred credits			15,585			14,501
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES						225,140			222,608
TOTAL					$	1,129,918		$	1,135,340

The accompanying notes are an integral part of these financial statements.

36

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Orange and Rockland Utilities, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

			For the Three Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
OPERATING REVENUES
	Electric		$	117,387		$	135,549
	Gas			27,248			36,067
TOTAL OPERATING REVENUES				144,635			171,616
OPERATING EXPENSES
	Purchased power			55,740			74,223
	Gas purchased for resale			16,269			24,534
	Other operations			28,697			30,361
	Maintenance			6,400			6,380
	Depreciation and amortization			8,492			8,074
	Taxes, other than income tax			12,324			13,341
	Income taxes			4,314			5,274
TOTAL OPERATING EXPENSES				132,236			162,187
OPERATING INCOME				12,399			9,429
OTHER INCOME (DEDUCTIONS)
	Investment income			78			275
	Other income and deductions			93			(19	)
	Income taxes			175			38
TOTAL OTHER INCOME (DEDUCTIONS)				346			294
INCOME BEFORE INTEREST CHARGES				12,745			9,723
	Interest on long-term debt			5,323			5,527
	Other interest			355			740
	Allowance for borrowed funds used during construction			(63	)		(296	)
NET INTEREST CHARGES				5,615			5,971
NET INCOME FOR COMMON STOCK			$	7,130		$	3,752

The accompanying notes are an integral part of these financial statements.

37

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Orange and Rockland Utilities, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

			For the Six Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
OPERATING REVENUES
	Electric		$	208,365		$	260,585
	Gas			92,270			140,444
	Non-utility			-			34
TOTAL OPERATING REVENUES				300,635			401,063
OPERATING EXPENSES
	Purchased power			93,791			144,970
	Gas purchased for resale			52,015			97,067
	Other operations			56,233			58,084
	Maintenance			12,157			13,613
	Depreciation and amortization			16,952			16,318
	Taxes, other than income tax			25,426			28,263
	Income taxes			13,079			14,153
TOTAL OPERATING EXPENSES				269,653			372,468
OPERATING INCOME				30,982			28,595
OTHER INCOME (DEDUCTIONS)
	Investment income			(3	)		1,209
	Other income and deductions			(191	)		(343	)
	Income taxes			389			(147	)
TOTAL OTHER INCOME (DEDUCTIONS)				195			719
INCOME BEFORE INTEREST CHARGES				31,177			29,314
	Interest on long-term debt			10,564			11,020
	Other interest			1,216			1,894
	Allowance for borrowed funds used during construction			(123	)		(527	)
NET INTEREST CHARGES				11,657			12,387
NET INCOME FOR COMMON STOCK			$	19,520		$	16,927

The accompanying notes are an integral part of these financial statements.

38

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Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

			As at
			June 30, 2002			December 31, 2001
			(Thousands of Dollars)
BALANCE, JANUARY 1			$	151,792		$	139,610
	Net income for the period			19,520			40,182
TOTAL				171,312			179,792
DIVIDENDS DECLARED ON CAPITAL STOCK				(14,000	)		(28,000	)
BALANCE, JUNE 30			$	157,312		$	151,792

Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Three Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$	7,130		$	3,752
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Investment in marketable equity securities, net of ($118), and $16 taxes, respectively			(168	)		23
	Unrealized gains/(losses) on derivatives qualified as hedges, net of ($1,160), and $257 taxes, respectively			(1,655	)		405
	Less: Reclassification adjustment for gains/(losses) included in net income, net of ($270) and ($356) taxes, respectively			(385	)		(502	)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES				(1,438	)		930
COMPREHENSIVE INCOME			$	5,692		$	4,682

The accompanying notes are an integral part of these financial statements.

39

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Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

			For the Six Months Ended June 30,
			2002			2001
			(Thousands of Dollars)
NET INCOME FOR COMMON STOCK			$	19,520		$	16,927
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES
	Investment in marketable equity securities, net of ($244), and ($279) taxes, respectively			(348	)		(189	)
	Minimum pension liability adjustments, net of ($166) and $63 taxes, respectively			(238	)		63
	Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $0 and ($5,709) taxes, respectively			—			(8,107	)
	Unrealized gains/(losses) on derivatives qualified as hedges, net of ($1,012) and $15 taxes, respectively			(1,444	)		21
	Less: Reclassification adjustment for gains/(losses) included in net income, net of ($552) and ($356) taxes, respectively			(788	)		(502	)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAXES				(1,242	)		(7,710	)
COMPREHENSIVE INCOME			$	18,278		$	9,217

The accompanying notes are an integral part of these financial statements.

40

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Orange and Rockland Utilities, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

					For the Six Months Ended June 30,
					2002			2001
					(Thousands of Dollars)
OPERATING ACTIVITIES
	Net income				$	19,520		$	16,927
	PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
			Depreciation and amortization			16,770			16,160
			Amortization of investment tax credit			(241	)		(243	)
			Federal and state income tax deferred			398			(6,655	)
			Other non-cash changes (debits)			1,672			879
	CHANGES IN ASSETS AND LIABILITIES
			Accounts receivable - net, and accrued utility revenue			(4,761	)		14
			Materials and supplies, including fuel and gas in storage			7,523			59
			Prepayments, other receivables and other current assets			1,893			(8,398	)
			Deferred recoverable fuel costs			5,047			6,236
			Accounts payable			8,342			21,730
			Refunds to customers			495			(2,332	)
			Other - net			4,202			(8,397	)
NET CASH FLOWS FROM OPERATING ACTIVITIES						60,860			35,980
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
			Construction expenditures			(21,859	)		(23,398	)
			Proceeds from disposition of property			325			118
NET CASH FLOWS USED IN INVESTING ACTIVITIES INCLUDING CONSTRUCTION						(21,534	)		(23,280	)
FINANCING ACTIVITIES INCLUDING DIVIDENDS
			Short-term debt arrangements			(16,600	)		(4,570	)
			Dividend to parent			(14,000	)		(14,000	)
NET CASH FLOWS USED IN FINANCING ACTIVITIES INCLUDING DIVIDENDS						(30,600	)		(18,570	)
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD						8,726			(5,870	)
BALANCE AT BEGINNING OF PERIOD						1,785			8,483
BALANCE AT END OF PERIOD					$	10,511		$	2,613

The accompanying notes are an integral part of these financial statements.

41

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - O&R

Note A - General

These footnotes accompany and form an integral part of the interim consolidated financial statements of Orange and Rockland Utilities, Inc. (O&R), a wholly owned subsidiary of Consolidated Edison, Inc. (Con Edison). These financial statements are unaudited but, in the opinion of O&R's management, reflect all adjustments (which include only normally recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These financial statements should be read together with the audited O&R financial statements (including the notes thereto) included in the combined Con Edison, Consolidated Edison Company of New York, Inc. (Con Edison of New York) and O&R's Annual Reports on Form 10-K for the year ended December 31, 2001 (the Form 10-K). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

Note B - Environmental Matters

Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of O&R and may be present in its facilities and equipment.

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) and similar state statutes impose joint and several strict liabilities, upon generators of hazardous substances for resulting removal and remedial costs and environmental damages. Liabilities under these laws can be material and in some instances may be imposed without regard to fault, or may be imposed for past acts, even though such past acts may have been lawful at the time that they occurred.

At June 30, 2002, O&R had accrued $36.8 million as its best estimate of its liability for sites as to which it has received process or notice alleging that hazardous substances generated by O&R (and, in most instances, other potentially responsible parties) were deposited. There will be additional liability relating to these sites and other sites, including the costs of investigating and remediating sites where O&R or its predecessors manufactured gas. The total amount of liability is not presently determinable but may be material to O&R's financial position, results of operations or liquidity.

O&R is permitted under current rate agreements to defer for subsequent recovery through rates certain site investigation and remediation costs with respect to hazardous waste. At June 30, 2002, $39.4 million of such costs had been deferred as a regulatory asset.

Suits have been brought in New York State and federal courts against O&R and many other defendants, wherein a large number of plaintiffs sought large amounts of compensatory and punitive damages for deaths and injuries allegedly caused by exposure to asbestos at various premises of O&R. The suits that have been resolved, which are many, have been resolved without any payment by O&R, or for amounts that were not, in the aggregate, material to the company. The amounts specified in all the remaining suits total billions of dollars but O&R believes that these amounts are greatly exaggerated, as were the claims already disposed of. Based on the information and relevant circumstances known to O&R at this time, these suits are not expected to have a material adverse effect on O&R's financial position, results of operations or liquidity.

42

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Workers' compensation administrative proceedings have been commenced, wherein current and former employees claim benefits upon alleged disability from exposure to asbestos. Based on the information and relevant circumstances known to O&R at this time, these claims are not expected to have a material adverse effect on O&R's financial position, results of operations or liquidity. At June 30, 2002, O&R had accrued a $1.6 million provision as its best estimate of its liability for these alleged claims and deferred a like amount as a regulatory asset.

In May 2000, the New York State Department of Environmental Conservation issued notices of violation to O&R and four other companies that have operated coal-fired electric generating facilities in New York State. The notices allege violations of the Federal Clean Air Act and the New York State Environmental Conservation Law resulting from the alleged failure to install pollution control equipment that would have reduced emissions of certain chemicals deemed potentially hazardous. The notice of violations received by O&R relates to the Lovett Generating Station that it sold in June 1999. O&R is unable to predict whether or not the alleged violations will have a material adverse effect on its financial position, results of operations or liquidity.

Note C - Related Party Transactions

Each month O&R is invoiced by Con Edison and its affiliates for the cost of any services rendered to O&R by Con Edison and its affiliates. These services, provided primarily by Con Edison's other regulated subsidiary, Con Edison of New York, include substantially all administrative support operations, such as corporate directorship and associated ministerial duties, accounting, treasury, investor relations, information resources, legal, human resources, fuel supply and energy management services. The cost of these services totaled $7.2 million and $7.7 million for the six months ended June 30, 2002 and 2001, respectively. In addition, O&R purchased $51.0 million of natural gas and $12.3 million of electricity from Con Edison of New York during the 2002 period and $97.6 million of natural gas from Con Edison of New York during the 2001 period.

O&R provides certain recurring services to Con Edison of New York on a monthly basis, including cash receipts processing and certain administrative services. The cost of these services, which are invoiced to Con Edison of New York, totaled $5.8 million and $5.7 million during the first six months of 2002 and 2001, respectively.

In February 2002, the Federal Energy Regulatory Commission authorized Con Edison of New York to lend funds to O&R, for periods of not more than 12 months, in amounts not to exceed $150 million at any time outstanding, at prevailing market rates. Through June 30, 2002, O&R has not borrowed any funds from Con Edison of New York.

Note D - Derivative Instrument and Hedging Activities

As of January 2001, O&R adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133," and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133" (collectively, SFAS No. 133).

43

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Energy Price Hedging

O&R uses derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity (Hedges). As of June 30, 2002, the fair value of the derivatives for such use was a loss of $0.6 million.

Pursuant to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulations," O&R defers recognition in income of gains and losses on a Hedge until the underlying transactions are completed. Pursuant to rate provisions that permit the recovery of the cost of purchased power, O&R credits or charges to its customers gains and losses on Hedges and related transaction costs. See "Recoverable Energy Costs" in Note A to the company's financial statements included in Item 8 of the Form 10-K. Upon adoption of SFAS No. 133, O&R had no transition adjustments relating to Hedges to recognize in other comprehensive income.

Interest Rate Hedging

O&R uses Cash Flow Hedge Accounting for its interest rate swap agreement. As of June 30, 2002, the fair value of the O&R interest rate swap was a loss of $15.4 million. In connection with its $55 million promissory note issued to the New York State Energy Research and Development Authority for the net proceeds of the Authority's variable rate Pollution Control Refunding Revenue Bonds, 1994 Series A (the 1994 Bonds), O&R has a swap agreement pursuant to which it pays interest at a fixed rate of 6.09 percent and is paid interest at the same variable rate as is paid on the 1994 Bonds. Upon adoption of SFAS No. 133, O&R recognized in other comprehensive income after-tax transition adjustment losses relating to the swap agreement of $8.1 million. For the second quarter of 2002, O&R recognized in other comprehensive income unrealized after-tax losses of $1.6 million compared with unrealized after-tax gains of $0.4 million for the second quarter of 2001. For the six months ended June 30, 2002 and 2001, O&R recognized in other comprehensive income unrealized after-tax losses of $1.4 million and after-tax gains of $0.1 million, respectively. During the second quarters of 2002 and 2001, $0.4 million and $0.5 million, respectively, of after-tax losses were reclassified from accumulated other comprehensive income to income. For the six months ended June 30, 2002 and 2001, after-tax losses of $0.8 million and $0.5 million, respectively, were reclassified from accumulated other comprehensive income to income. As of June 30, 2002, $1.1 million of after-tax losses relating to the swap agreement were expected to be reclassified from accumulated other comprehensive income to income within the next 12 months.

44

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Comprehensive Income

Unrealized gains/(losses) on derivatives, net of tax, included in accumulated other comprehensive income for the three months ended June 30, 2002 and 2001 were as follows:

		Three Months Ended
		June 30, 2002			June 30, 2001
		(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges, net of ($1.2) and $0.3 taxes		$	(1.6	)	$	0.4
Less: Reclassification adjustment for gains/(losses) included in net income, net of ($0.3) and ($0.4) taxes			(0.4	)		(0.5	)
Unrealized gains/(losses) on derivatives qualified as hedges for the period		$	(1.2	)	$	0.9

Unrealized gains/(losses) on derivatives, net of tax, included in accumulated other comprehensive income for the six months ended June 30, 2002 and 2001 were as follows:

		Six Months Ended
		June 30, 2002			June 30, 2001
		(Millions of Dollars)
Unrealized gains/(losses) on derivatives qualified as hedges due to cumulative effect of a change in accounting principle, net of $0 and ($5.7) taxes		$	—		$	(8.1	)
Unrealized gains/(losses) on derivatives qualified as hedges, net of ($1.0) and $0 taxes			(1.4	)		0.1
Less: Reclassification adjustment for gains/(losses) included in net income, net of ($0.6) and ($0.4) taxes			(0.8	)		(0.5	)
Unrealized gains/(losses) on derivatives qualified as hedges for the period		$	(0.6	)	$	(7.5	)

Note E - Financial Information by Business Segment

O&R's business segments were determined based on similarities in economic characteristics, the regulatory environment, and management's reporting requirement. O&R's business segments are:

•

Regulated Electric - consists of regulated utility activities relating to the transmission and distribution of electricity in New York, New Jersey, and Pennsylvania.



•

Regulated Gas - consists of regulated utility activities relating to the transportation and distribution of natural gas in New York and Pennsylvania.



•

Unregulated Subsidiary - represents the operations of O&R's unregulated subsidiary in a land development business. The company is pursuing the closure of its real estate operations and is in the process of selling off remaining land holdings.

All revenues of O&R's business segments are from customers located in the United States. Also, all assets are located in the United States and are materially consistent with segment assets as disclosed in the Form 10-K.

Common services shared by the business segments (shared services) are assigned directly or allocated based on various cost factors, depending on the nature of the service provided.

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The financial data for business segments are as follows:

		Regulated Electric
		Three Months Ended						Six Months Ended
		June 30, 2002			June 30, 2001			June 30, 2002			June 30, 2001
		(Thousands of Dollars)
Operating revenue		$	117,387		$	135,549		$	208,365		$	260,585
Intersegment revenues			-			7			-			12
Depreciation and amortization			6,455			6,003			12,885			12,187
Operating income			12,626			10,609			20,789			19,489

		Regulated Gas
		Three Months Ended						Six Months Ended
		June 30, 2002			June 30, 2001			June 30, 2002			June 30, 2001
		(Thousands of Dollars)
Operating revenue		$	27,248		$	36,067		$	92,270		$	140,444
Intersegment revenues			-			-			-			-
Depreciation and amortization			2,037			2,071			4,067			4,130
Operating income			(45	)		(947	)		10,427			9,499

		Unregulated Subsidiaries
		Three Months Ended						Six Months Ended
		June 30, 2002			June 30, 2001			June 30, 2002			June 30, 2001
		(Thousands of Dollars)
Operating revenue		$	-		$	-		$	-		$	34
Intersegment revenues			-			-			-			-
Depreciation and amortization			-			-			-			1
Operating income			(182	)		(233	)		(234	)		(393	)

		Total
		Three Months Ended						Six Months Ended
		June 30, 2002			June 30, 2001			June 30, 2002			June 30, 2001
		(Thousands of Dollars)
Operating revenue		$	144,635		$	171,616		$	300,635		$	401,063
Intersegment revenues			-			7			-			12
Depreciation and amortization			8,492			8,074			16,952			16,318
Operating income			12,399			9,429			30,982			28,595

Note F - New Financial Accounting Standards

On January 1, 2002, O&R adopted SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 provides that goodwill (i.e., the excess of cost over fair value of the assets of a business acquired) and intangible assets with indefinite useful lives will no longer be amortized, but instead be tested for impairment at least annually. Other intangible assets will continue to be amortized over their useful lives. The adoption of SFAS No. 142 had no impact on O&R's consolidated financial position or results of operations.

In June 2002, The Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) discussed EITF Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." The Task Force reached a final consensus ruling that the revenue resulting from

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energy trading contracts, whether realized or unrealized and whether financially or physically settled, should be shown net in the income statement. The consensus also expanded the disclosure requirements for energy trading activities. The new ruling is effective for periods ending after July 2002 with reclassification of prior period amounts required. The adoption of EITF Issue No. 02-3 will have no impact on O&R's consolidated financial position or results of operations.

SFAS No. 143, "Accounting for Asset Retirement Obligations," which O&R is required to adopt on January 1, 2003, requires entities to record the fair value of a liability associated with an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity will capitalize the cost by increasing the carrying amount of the related asset. The liability is increased to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon retirement of the asset, the entity settles the obligation for the amount recorded or incurs a gain or loss. O&R has not yet determined the impact of this standard on its consolidated financial position or results of operations.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which O&R adopted on January 1, 2002, replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS No. 144 requires that all long-lived assets held for sale be measured at the lower of book value of fair value less cost to sell. The standard also broadens the reporting of discontinued operations. The adoption of SFAS No. 144 had no impact on O&R's financial position or results of operations.

SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," which was issued in April 2002, rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements." The provisions of this section are effective January 1, 2003. O&R does not expect that adoption of the standard will have a material adverse effect on its consolidated financial position or results of operations.

This Statement also amends SFAS No. 13, "Accounting for Leases," to require sale-leaseback accounting for certain lease modifications that have economic impacts similar to sale-leaseback transactions and amends certain other authoritative accounting pronouncement. These provisions of SFAS No. 145, adopted in May 2002, had no impact on O&R's consolidated financial position or results of operations.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which O&R is required to adopt on January 1, 2003, requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. O&R does not expect that adoption of the standard will have a material adverse effect on its consolidated financial position or results of operations.

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CON EDISON

Consolidated Edison, Inc. (Con Edison) is a holding company that operates only through its subsidiaries and has no material assets other than the stock of its subsidiaries. Con Edison's principal subsidiaries are regulated utilities: Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R). Con Edison also has several unregulated subsidiaries, which accounted for 1.9 percent of consolidated net income in the six months ended June 30, 2002 and 7.0 percent of consolidated total assets at June 30, 2002.

The following discussion and analysis, which relates to the interim consolidated financial statements of Con Edison and its subsidiaries (including Con Edison of New York and O&R) included in Part I, Item 1 of this report, should be read in conjunction with Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations (Con Edison's Form 10-K MD&A) in Item 7 of the combined Con Edison, Con Edison of New York and O&R Annual Reports on Form 10-K for the year ended December 31, 2001 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of the combined Con Edison, Con Edison of New York and O&R Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2002. Reference is also made to the notes to the Con Edison financial statements in Part I, Item 1 of this report, which notes are incorporated herein by reference.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Con Edison's financial statements reflect the application of its accounting policies, which conform to accounting principles generally accepted in the United States. The company's critical accounting policies include industry-specific accounting applicable to its regulated public utility subsidiaries, and accounting for pensions and other postretirement benefits, contingencies, derivative instruments, goodwill and leases.

The application of certain of these accounting policies requires the company to use estimates. Such estimates require the company to make assumptions about matters that are highly uncertain and for which different estimates that also could reasonably have been used could have had a material impact on the company's financial condition or results of operations.

Accounting for Regulated Public Utilities—SFAS No. 71

Con Edison's principal subsidiaries, Con Edison of New York and O&R, are regulated public utilities subject to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," and, in accordance with SFAS No. 71, subject to the accounting requirements and rate making practices of the Federal Energy Regulatory Commission (FERC) and state public utility regulatory authorities. See "Critical Accounting Policies" in Con Edison's Form 10-K MD&A and Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

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Accounting for Pensions and Other Postretirement Benefits

Con Edison and its subsidiaries have pension and other postretirement plans that cover substantially all employees and retirees. The company accounts for these plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." In applying these accounting policies, the company has made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, future compensation and health cost increase trends, and appropriate discount rates. See Notes D and E to the Con Edison financial statements included in Item 8 of the Form 10-K for information about these assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2001, 2000 and 1999. Plan expense or credit in future periods will depend on the assumptions the company makes and actual performance.

Accounting for Contingencies

SFAS No. 5, "Accounting for Contingencies," applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. The company's known material contingencies include its litigation relating to its October 1999 merger agreement with Northeast Utilities, proceedings relating to outages at the nuclear generating unit the company sold in 2001, its workers' compensation claims and its responsibility for hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs), and coal tar that have been used or generated in the course of the operations of its subsidiaries and may be present in its facilities and equipment. See Notes B, C and D to the Con Edison financial statements included in Part I, Item 1 of this report. In accordance with SFAS No. 5, the company has accrued its best estimate of its probable losses relating to these contingencies and no liability has been accrued where the loss is not probable or the amount of the loss cannot be reasonably estimated.

Accounting For Derivative Instruments

Con Edison's subsidiaries use derivative financial instruments to hedge market price fluctuations in related underlying transactions for the physical purchase or sale of electricity or gas and interest rate risk on certain debt securities. See "Financial Market Risks" below, and Note F to the Con Edison financial statements included in Part I, Item 1 of this report.

Accounting for Goodwill

Con Edison adopted SFAS No. 142, "Goodwill and Other Intangible Assets" on January 1, 2002. In accordance with SFAS No. 142 Con Edison ceased amortizing goodwill and will instead test it for impairment at least annually. The impairment test is a two-step process; the first step identifies the potential impairment and the second step measures the amount of impairment loss, if any. The company completed the first step, which indicated that the goodwill related to Con Edison Development is impaired. On completion of the second step, the company expects to record an after-tax impairment charge of approximately $20 million effective January 1, 2002. See "New Financial Accounting Standards" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K and Note H to the Con Edison financial statements included in Part I, Item 1 of this report. In determining

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whether or not its goodwill was impaired, the company was required to make certain assumptions, including those related to future cash flows and discount rates.

Accounting for Leases

Con Edison applies SFAS No. 13, "Accounting for Leases" and other related accounting pronouncements to its leasing transactions. See Note J to the Con Edison financial statements included in Item 8 of the Form 10-K and Note E to the Con Edison financial statements included in Part I, Item 1 of this report.

LIQUIDITY AND CAPITAL RESOURCES

Con Edison's liquidity is dependent on cash flows from its operating, investing and financing activities listed on the accompanying consolidated statement of cash flows and discussed below. As a result of these activities, unrestricted cash and temporary cash investments decreased $212.2 million during the first six months of 2002. In addition, $56.0 million of the restricted cash in an escrow account was used during this period to retire a like amount of short-term financing relating to electric generating projects. See Note C to the Con Edison financial statements included in Item 8 of the Form 10-K.

Cash Flows from Operating Activities

Net cash flows from operating activities during the first six months of 2002 were $349.6 million, $49.7 million less than the first six months of 2001. This decrease reflects principally lower net income, increased accounts receivable and higher recoverable energy costs, offset in part by increased accounts payable.

Accounts receivable from customers, less allowance for uncollectible accounts, increased $26.5 million at June 30, 2002 compared with year-end 2001, reflecting primarily the timing of customer payments and increased customer billings, resulting from higher sales and delivery volumes. Con Edison of New York's equivalent number of days of revenue outstanding (ENDRO) was 26.3 days at June 30, 2002 compared with 29.6 days at year-end 2001. For O&R, the ENDRO was 18.9 days and 23.6 days at June 30, 2002 and at year-end 2001, respectively. The decrease in ENDRO for Con Edison of New York and O&R is due to the decrease in receivables under payment agreements and on level billing accounts.

Other accounts receivable increased $112.4 million at June 30, 2002 compared with year-end 2001, due primarily to a $95.1 million federal tax refund in connection with Con Edison of New York's calculation of its repair allowance deductions and other matters.

Accrued pension credits increased $170.9 million at June 30, 2002 compared with year-end 2001 reflecting favorable past performance in the company's pension fund and assumptions about performance. See Note D to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Accounts payable increased $104.0 million at June 30, 2002 compared with year-end 2001, due primarily to a higher level of energy purchases in June 2002 as compared to December 2001. See discussion of electric purchase power costs in "Results of Operations," below.

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The regulatory asset for deferred recoverable energy costs increased $92.0 million at June 30, 2002 compared with year-end 2001, due primarily to the deferral for future recovery of purchased power and gas costs, offset in part by the ongoing recovery of previously deferred amounts. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Other-net assets increased $71.6 million at June 30, 2002 compared with year-end 2001 due primarily to the following items:

		Effect on Cash
		(Millions of Dollars)
Sale of nuclear generating unit		$	45.8
Pension and benefit reserves			46.4
Accrued taxes			(49.7	)
Other current liabilities			(30.8	)
Proceeds from auction of the transmission congestion contracts			73.9
Other			(14.0	)
		$	71.6

The regulatory asset associated with Con Edison of New York's sale of its nuclear generating unit in September 2001 decreased $45.8 million at June 30, 2002, compared with year-end 2001. This regulatory asset was established for the recovery from customers of the net-after tax loss on the sale. The decrease reflects the recognition in 2002 of $30.4 million of New York State tax benefits that were not reflected in the net after-tax loss when the regulatory asset was established (which reduced the net-after tax loss to $145 million) and the recovery from customers in 2002 of $15.4 million pursuant to rate provisions approved in September 2001 by the New York State Public Service Commission (PSC). Pursuant to these provisions, net revenues have been reduced to reflect that Con Edison of New York no longer has costs associated with the nuclear generating unit. Annual revenues include $35 million that is being used to amortize the regulatory asset. The electric rate agreement approved by the PSC in November 2000 provides that the company "will be given a reasonable opportunity to recover stranded and strandable costs remaining at March 31, 2005, including a reasonable return on investments." See Notes A and I to the Con Edison financial statements included in Item 8 of the Form 10-K.

Pension and benefits reserves increased $46.4 million at June 30, 2002 compared with year-end 2001, due primarily to an increase of $42.2 million in the cost of postretirement benefits other than pensions (OPEB). The reserve represents OPEB costs that have been recognized in income but not funded, and also includes a minimum liability for supplemental retirement programs, a portion of which has been included in other comprehensive income. See Note E to Con Edison's financial statements included in Item 8 of the Form 10-K.

Accrued taxes decreased $49.7 million at June 30, 2002 compared with year-end 2001. Due to the World Trade Center attack the Federal government extended to January 2002 the due date for final payment of 2001 estimated income taxes. As a result, the payment normally made in December was not made until mid-January 2002.

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Other current liabilities decreased $30.8 million at June 30, 2002 compared with year-end 2001, reflecting principally net unrealized mark-to-market gains on energy hedging transactions entered into by the unregulated subsidiaries.

Proceeds from the auction of transmission congestion contracts increased $73.9 million at June 30, 2002 compared with year-end 2001. Con Edison of New York sells rights to use its transmission system for specified periods of time, pursuant to procedures established by the New York Independent System Operator (NYISO). These auction proceeds are deferred for customer benefit, as directed by the PSC.

Cash Flows Used in Investing and Financing Activities

Net cash flows used in investing activities during the first six months of 2002 increased $261.8 million compared with the first six months of 2001. The increase reflects increased construction expenditures in the first six months of 2002 as compared with 2001 ($58.1 million) and the receipt in 2001 of proceeds from the sale of the company's 480 MW interest in the Roseton generating station ($100.0 million, net of federal income tax). Construction expenditures increased in 2002 principally to meet load growth on Con Edison of New York's electric distribution system and to effect permanent restoration of portions of the electric, gas, and steam systems in lower Manhattan following the World Trade Center attack.

Con Edison's investments in non-utility plant increased $138.2 million during the first six months of 2002 compared with the first six months of 2001, due principally to unregulated generation projects and fiber-optic network build-out costs.

Net cash flows from financing activities during the first six months of 2002 increased $96.5 million compared with the first six months of 2001, reflecting principally reduced debt redemptions and refundings.

In February 2002, Con Edison of New York redeemed at maturity $150 million of 6.6 percent 9-year debentures. In April 2002, Con Edison issued $325 million of 7.25 percent 40-year debentures, the proceeds of which were used to repay commercial paper. In June 2002, Con Edison of New York redeemed at maturity $150 million of variable rate 5-year debentures and issued $300 million of non-callable 5.625 percent 10-year debentures.

During the first six months of 2002, Con Edison issued 765,636 shares of its common stock for $32.1 million under its Automatic Dividend Reinvestment and Cash Payment Plan, Stock Purchase Plan and Stock Option Plan.

Capital Resources and Requirements

There have been no material changes in the company's capital resources or capital requirements from those reflected in the Form 10-K. In August 2002, President Bush signed into law an appropriations bill, which authorizes funds for which the company is eligible to apply to recover costs it incurred in connection with the World Trade Center attack. For additional information, see "Cash Flows Used in Investing and Financing Activities," above, "Capital Resources" and "Capital Requirements" in Con Edison's Form 10-K MD&A and Note Q to the Con Edison's financial statements included in Item 8 of the Form 10-K.

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Con Edison's ratio of earnings to fixed charges (for the periods ended on the date indicated) and common equity ratio (as of the date indicated) were:

		Six months ended June 30, 2002		Twelve months ended
				June 30, 2002		December 31, 2001
Earnings to fixed charges		2.94		3.42		3.49
Common equity ratio*		48.2		48.2		49.8

          * Common shareholders' equity as a percentage of total capitalization

Con Edison's ratio of earnings to fixed charges decreased for the periods ending June 30, 2002 compared to the 12-month period ending December 31, 2001 primarily as a result of decreased earnings.

Contractual Obligations and Commercial Commitments

Reference is made to "Contractual Obligations and Commercial Commitments" in Con Edison's Form 10-K MD&A. At June 30, 2002 there was no material change in the company's contractual obligations and commercial commitments compared to those at December 31, 2001, other than the long-term debt transactions described under "Cash Flows Used in Investing and Financing Activities," above.

Energy Trading Net Assets Accounted For at Fair Value

An unregulated subsidiary of Con Edison engages in energy trading activities in relation to which Con Edison recognized in income in the first six months of 2002 $3.8 million of mark-to-market pre-tax gains, reflecting changes in the fair value of derivative financial and commodity instruments. See "Financial Market Risks," below, Note F to the Con Edison financial statements included in Part 1, Item 1 of this report and Note O to the Con Edison financial statements included in Item 8 of the Form 10-K.

As of June 30, 2002, the sources of the fair value of the energy trading net assets are as follows:

		Fair Value of Net Assets at Period-End (Millions of Dollars)
		Maturity less than 1 year			Maturity 1 - 3 years			Maturity 4 - 5 years			Maturity in excess of 5 years
														Total Fair Value
Source of Fair Value
Prices provided by external sources		$	10.7		$	2.5		$	—		$	—		$	13.2
Prices based on models and other valuation methods			1.9			0.1			0.2			(0.4	)		1.8
														$	15.0

Prices provided by external sources - represents the fair value of exchange-traded futures and options quoted and the fair value of positions for which price quotations are available through or derived from brokers or other market sources.

Prices based on models and other valuation methods - represents the fair value of positions calculated using internal models when external prices are not available. Internal models incorporate the use of options pricing, load forecasts and estimates of the present value of cash flows based upon underlying contractual terms. The models reflect management's best estimates, including observable market prices, estimated market prices in the absence of quoted market prices, the risk-free market discount rate, volatility factors, estimated correlation of energy commodity prices, contractual volumes, and estimated volumes for requirements contracts. Counterparty-specific credit quality, market price uncertainty and other risks are factored into the models.

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The change in fair value of the energy trading net assets for the six months ended June 30, 2002, is as follows:

		Total Fair Value
		(Millions of Dollars)
Fair value of net assets outstanding at the beginning of the period (January 1, 2002)		$	11.2
Contracts realized or otherwise settled during the period			(3.9	)
Fair value of new contracts entered into during the period			5.1
Changes in fair value of contracts that existed at the beginning of the period			2.6
Fair value of net assets outstanding at the end of the period (June 30, 2002)		$	15.0

REGULATORY MATTERS

In April 2002, the PSC approved a three-year gas rate agreement that reduces retail sales and transportation rates by approximately $25 million, on an annual basis. Reference is made to "Regulatory Matters" in Con Edison's Form 10-K MD&A.

In July 2002, FERC issued a notice of proposed rulemaking on a standard market design for the wholesale electricity industry. FERC indicated that it was undertaking standard market design to create consistent wholesale competitive markets and efficient transmission systems in order to reduce costs to customers and improve reliability. The notice proposes to establish a single open access transmission tariff that would apply to all transmission customers: wholesale, unbundled retail and bundled retail service. Other pricing, monitoring, operational and governance matters are also addressed in the notice, which the company is in the process of reviewing. For information about the company's transmission facilities, see "Con Edison of New York—Electric Supply" in Item 1 of the Form 10-K, "Regulatory Matters—Electric Supply" in Con Edison of New York's 10-K MD&A and Item 2 of the Form 10-K.

FINANCIAL MARKET RISKS

Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments, and derivative commodity instruments are interest rate risk and commodity price risk.

Interest Rate Risk

The interest rate risk relates primarily to variable rate debt and to new debt financing needed to fund capital requirements, including utility construction expenditures and maturing debt securities. Con Edison and its subsidiaries manage interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refunding of debt. The company estimates that, as of June 30, 2002, a 10 percent change in interest rates applicable to its variable rate debt would result in a change in annual interest expense of approximately $2.1 million.

In addition, Con Edison and its subsidiaries, from time to time, have entered into derivative financial instruments to hedge interest rate risk on certain debt securities and may use derivative financial instruments to hedge interest rate risk or changes in fair value of certain debt securities. See "Interest Rate Hedging" in Note F to the Con Edison financial statements included in Part I, Item 1 of this report.

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Commodity Price Risk

Con Edison's commodity price risk relates primarily to the purchase and sale of electricity and gas, related derivative instruments and the sale of electricity from the generating facilities of its unregulated subsidiaries. The regulated and unregulated subsidiaries have risk management strategies to mitigate their related exposures. See "Energy Price Hedging" in Note F to the Con Edison financial statements included in Part I, Item 1 of this report.

Con Edison estimates that, as of June 30, 2002, a 10 percent change in market prices would result in a change in fair value of approximately $17.5 million for the derivative instruments used by its utility subsidiaries to hedge purchases of electricity and gas. The company expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased. In general, the rates the utility subsidiaries charge customers for electric, gas and steam service are subject to change for fluctuations in the cost of purchased power or gas, including gains or losses on such derivative instruments and related transaction costs. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Con Edison's unregulated subsidiaries use a value-at-risk model to assess the market risk of their electricity and gas commodity activities. The model includes fixed price sales commitments, physical forward contracts, and commodity derivative instruments. Value-at-risk represents the potential gain or loss on instruments or portfolios due to changes in market factors, for a specified time period and confidence level. The unregulated subsidiaries estimate value-at-risk across their electricity and natural gas commodity businesses using a delta-normal variance/covariance model with a 95 percent confidence level and assuming a one-day holding period. Since the value-at-risk calculation involves complex calculation methodologies, estimates and assumptions that are based on past experience, it is not necessarily indicative of future results. The calculated value-at-risk with respect to commodity price exposure associated with contractual arrangements of the unregulated subsidiaries was approximately $1.2 million as of June 30, 2002. The average, high, and low values-at-risk for the six months ended June 30, 2002 were $1.4 million, $2.7 million and $0.6 million, respectively.

Environmental Matters

For information concerning potential liabilities of Con Edison arising from laws and regulations protecting the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see Note B to the Con Edison financial statements included in Part I, Item 1 of this report.

RESULTS OF OPERATIONS

Second Quarter of 2002 Compared with Second Quarter of 2001

Con Edison's net income for common stock for the second quarter of 2002 was $97.6 million or $.46 a share (based upon an average of 212.8 million common shares outstanding) compared with $100.7 million or $.48 a share (based upon an average of 212.1 million common shares outstanding) for the second quarter of 2001. The company's net income in the 2002 period reflects the impact of softness in the economy, partially offset by lower operating expenses.

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Earnings for the quarters ended June 30, 2002 and 2001 were as follows:

			2002			2001
			(Millions of Dollars)
Con Edison of New York			$	97.2		$	102.9
O&R				7.1			3.7
Unregulated subsidiaries				0.4			(2.1	)
Other*				(7.1	)		(3.8	)
	Con Edison		$	97.6		$	100.7

*

Includes parent company interest and litigation expenses, goodwill amortization for the 2001 period and inter-company eliminations.

A comparison of the results of operations of Con Edison for the second quarter of 2002 compared to the second quarter of 2001 follows:

THREE MONTHS ENDED JUNE 30, 2002 COMPARED WITH
THREE MONTHS ENDED JUNE 30, 2001

		Increases (Decreases) Amount			Increases (Decreases) Percent
		(Millions of Dollars)
Operating revenues		$	(212.0	)	(10.0	)%
Purchased power - electric and steam			(14.1	)	(1.8	)
Fuel - electric and steam			(10.5	)	(18.3	)
Gas purchased for resale			(78.8	)	(39.8	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)			(108.6	)	(10.0	)
Other operations and maintenance			(65.0	)	(16.5	)
Depreciation and amortization			(14.7	)	(10.7	)
Taxes, other than income tax			12.6		4.9
Income tax			(25.7	)	(29.6	)
Operating income			(15.8	)	(7.3	)
Other income less deductions and related federal income tax			12.1		217.7
Net interest charges			(0.6	)	(0.6	)
Net income for common stock		$	(3.1	)	(3.1	)%

A discussion of Con Edison's operating revenues and operating income by business segment follows. Con Edison's principal business segments are the electric, gas and steam utility businesses of its regulated subsidiaries and the businesses of its unregulated subsidiaries. For additional information about the segments, see Note G to the Con Edison financial statements included in Part I, Item 1 of this report.

Electric

Con Edison's electric operating revenues in the second quarter of 2002 decreased $131.9 million compared with the second quarter of 2001. The decrease reflects net revenue reductions of approximately $63.1 million related to the sale of Con Edison of New York's nuclear generating unit in September 2001 (as discussed above under "Cash Flows From Operating Activities") and lower fuel and purchased power costs of $38.7 million (discussed below). The decrease also reflects the completion on March 31, 2002 of the one-year amortization of the previously deferred gain on the sale of divested plants and the New York Power Authority (NYPA) revenue increase ($21.7 million in total). See "Recoverable Energy Costs" and

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"Rate and Restructuring Agreements" in Notes A and I to the Con Edison financial statements included in Item 8 of the Form 10-K.

Electricity sales and delivery volumes for Con Edison's utility subsidiaries increased 2.0 percent in the second quarter of 2002 compared with the second quarter of 2001. After adjusting for variations, principally weather and billing days, in each period electricity sales volumes for Con Edison of New York and O&R increased 1.0 percent and 4.7 percent, respectively, in the second quarter of 2002. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison's purchased power costs decreased $50.6 million in the second quarter of 2002 compared with the second quarter of 2001, due to a decrease in the price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by the increased purchased volumes resulting from the sale of Con Edison of New York's nuclear generating unit in September 2001. Fuel costs increased $12.0 million due to an increase in the price of fuel, offset in part by a decrease in volumes as a result of decreased generation at company-owned power plants. In general, Con Edison's utility subsidiaries recover prudently incurred fuel and purchased power costs pursuant to rate provisions approved by the applicable state public utility commissions. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Con Edison's electric operating income decreased $0.6 million in the second quarter of 2002 compared with the second quarter of 2001. The principal component of the decrease was a decrease in net revenues (operating revenues less fuel and purchased power costs) of $93.3 million. The decrease in net revenues reflects the completion on March 31, 2002 of the one-year amortization of a previously deferred gain on the sale of divested plants and the NYPA revenue increase ($21.7 million) and net revenue reductions ($72.2 million) related to the sale of the nuclear generating unit. The decrease in net revenues is offset in part by reduced other operations and maintenance expenses of $68.2 million, decreased depreciation expense of $13.6 million and reduced property tax expense of $2.5 million, resulting primarily from the sale.

Gas

Con Edison's gas operating revenues decreased $63.0 million and gas operating income decreased $11.0 million in the second quarter of 2002 compared with the second quarter of 2001. The lower revenues reflect reduced sales to gas customers, resulting primarily from the unusual weather and revenue reductions implemented in accordance with the gas rate agreement approved by the PSC in April 2002. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less gas purchased for resale) of $18.0 million as well as increased property tax expense ($10.5 million) and increased expenses for customer related services ($1.8 million), offset in part by reduced transmission and distribution expenses ($3.2 million), and reduced income taxes ($15.7 million).

Gas sales and transportation volumes for firm customers for Con Edison's utility subsidiaries decreased 3.6 percent in the second quarter of 2002 compared with the second quarter of 2001 primarily as a result of the unusual weather. After adjusting for variations, principally weather and billing days in each period,

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firm gas sales and transportation volumes in the 2002 period increased 0.3 percent for Con Edison of New York and increased 3.8 percent for O&R. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

A weather-normalization provision that applies to the gas business of Con Edison's utility subsidiaries moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $19.2 million and steam operating income increased $1.1 million for the second quarter of 2002 compared with the second quarter of 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased steam power costs. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K. The increase in operating income reflects primarily reduced transmission and distribution expenses ($0.7 million) and reduced income taxes ($5.8 million), offset in part by a decrease in net revenues (operating revenues less fuel and purchased power costs) of $0.4 million and increased revenue taxes of $4.7 million.

Steam sales volume decreased 4.8 percent in the 2002 period compared with the 2001 period, primarily, as a result of the unusual weather. After adjusting for variations, principally weather and billing days, in each period steam sales volume decreased 5.5 percent.

Other Income

Other income increased $12.1 million in the second quarter of 2002 compared to the second quarter of 2001, due principally to unrealized mark-to-market gains on commodity purchase and sale transactions and related hedges entered into by the unregulated subsidiaries ($3.4 million), compared to a loss of on these types of transactions in the second quarter of 2001 ($5.1 million). In addition, the increase reflects the cessation of goodwill amortization in accordance with Statement of Financial Accounting Standard No. 142 ($2.7 million; see "New Financial Accounting Standards" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K). In addition the allowance for equity funds used during construction increased by $1.7 million as a result of the East River re-powering project.

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Unregulated Businesses

Earnings for the unregulated subsidiaries increased $2.5 million in the second quarter of 2002 compared with the second quarter of 2001. The increase is due principally to higher electric retail sales volumes and higher electric retail gross margins, offset in part by the write-down of an unregulated subsidiary's remaining investment in Neon Communications, Inc. (NEON) of $1.3 million after-tax.

Six Months Ended June 30, 2002 Compared With Six Months Ended June 30, 2001

Con Edison's net income for common stock for the six months ended June 30, 2002 was $264.2 million or $1.24 a share (based upon an average of 212.5 million common shares outstanding) compared with $279.8 million or $1.32 a share (based upon an average of 212.1 million common shares outstanding) for the six months ended June 30, 2001. The company's net income in the 2002 period reflects the impact of the unusually mild winter and softness in the economy, partially offset by lower operating expenses.

Earnings for the six months ended June 30, 2002 and 2001 were as follows:

*

Includes parent company interest and litigation expenses, goodwill amortization for the 2001 period and inter-company eliminations.

A comparison of the results of operations of Con Edison for the first six months of 2002 compared to the first six months of 2001 follows:

SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH SIX MONTHS ENDED
JUNE 30, 2001

		Increases (Decreases) Amount			Increases (Decreases) Percent
		(Millions of Dollars)
Operating revenues		$	(999.1	)	(20.0)	%
Purchased power - electric and steam			(309.2	)	(17.4	)
Fuel - electric and steam			(130.0	)	(53.9	)
Gas purchased for resale			(305.8	)	(46.7	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)			(254.1	)	(10.9	)
Other operations and maintenance			(118.7	)	(15.1	)
Depreciation and amortization			(29.3	)	(10.8	)
Taxes, other than income tax			(28.0	)	(5.0	)
Income tax			(33.3	)	(16.3	)
Operating income			(44.8	)	(8.9	)
Other income less deductions and related federal income tax			25.1		Large
Net interest charges			(4.1	)	(1.9	)
Net income for common stock		$	(15.6	)	(5.6)	%

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A discussion of Con Edison's operating revenues and operating income by business segment follows. Con Edison's principal business segments are the electric, gas and steam utility businesses of its regulated subsidiaries and the businesses of its unregulated subsidiaries. For additional information about the segments, see Note G to the Con Edison financial statements included in Part I, Item 1 of this report.

Electric

Con Edison's electric operating revenues in the six months ended June 30, 2002 decreased $538.4 million compared with the six months ended June 30, 2001. The decrease reflects net revenue reductions of approximately $161.2 million (attributable primarily to the sale of Con Edison of New York's nuclear generating unit as discussed above under "Cash Flows From Operating Activities" and the April 2001 rate reduction), lower fuel and purchased power costs of $322.3 million (discussed below), reduced sales and deliveries of $15.8 million resulting from the very mild winter weather and economic slowdown, and a reserve related to the sale of Con Edison of New York's nuclear generating unit ($16.1 million). See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Electricity sales volumes for Con Edison's utility subsidiaries decreased 0.7 percent in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. After adjusting for variations, principally weather and billing days, in each period, electricity sales volumes for Con Edison of New York and O&R decreased 0.1 percent and increased 4.4 percent, respectively, in the 2002 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Purchased power costs decreased $288.2 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001, due to a decrease in the price of purchased power and an increase in volumes of electricity purchased from other suppliers by the participants in the company's Retail Choice programs, offset in part by the company's increased purchased volumes resulting from Con Edison of New York's sale of its nuclear generating unit in September 2001. Fuel costs decreased $34.1 million as a result of decreased generation, offset in part by an increase in the price of fuel. In general, Con Edison's utility subsidiaries recover prudently incurred purchased fuel and power costs pursuant to rate provisions approved by the applicable state public utility commission. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K.

Con Edison's electric operating income decreased $25.5 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The principal component of the decrease was lower net revenues (operating revenues less fuel and purchased power costs) of $218.1 million. The decrease in net revenues reflects lower sales due principally to weather and economic conditions ($15.8 million), a reserve related to the sale of Con Edison of New York's nuclear generating unit ($16.1 million) and net revenue reductions ($161.2 million). The decrease in net revenues is offset in part by reduced other operations and maintenance expenses of $116.1 million, lower depreciation expense of $27.2 million and lower property taxes of $5.2 million, resulting primarily from the sale in September 2001 of the company's nuclear generating unit. The decrease also reflects lower revenue taxes of $24.4 million.

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Gas

Con Edison's gas operating revenues decreased $291.0 million, while the cost of purchased gas decreased by $266.5 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The lower revenues reflect reduced sales and transportation to gas customers as discussed below. Gas operating income decreased $11.5 million in the six months ended June 30, 2002, reflecting the $24.5 million decrease in net revenues (operating revenues less gas purchased for resale) as well as increased property tax expense ($16.0 million), offset in part by reduced operation and maintenance expenses ($7.9 million), and lower revenue taxes ($12.3 million).

Gas sales and transportation volumes for firm customers for Con Edison's utility subsidiaries decreased 13.4 percent in the six months ended June 30, 2002 compared with the six months ended June 30, 2001, reflecting primarily the very mild winter weather and an increase in volumes of gas purchased from other suppliers by participants in the company's Retail Choice programs. After adjusting for variations, principally weather and billing days in each period, firm gas sales and transportation volumes in the 2002 period decreased 0.1 percent for Con Edison of New York and decreased 4.1 percent for O&R. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

A weather-normalization provision that applies to the gas business of Con Edison's utility subsidiaries moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $136.0 million and steam operating income decreased $12.1 million for the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased steam power costs. See "Recoverable Energy Costs" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less fuel and purchased power costs) of $32.2 million, offset in part by lower income taxes ($16.5 million) and revenue taxes ($1.8 million).

Steam sales volume decreased 18.3 percent in the six months ended June 30, 2002 compared with the six months ended June 30, 2001, reflecting primarily the very mild winter weather. After adjusting for variations, principally weather and billing days in each period, steam sales volume decreased 4.4 percent.

Other Income

Other income increased $25.2 million in the six months ended June 30, 2002 compared to the six months ended June 30, 2001, due principally to unrealized mark-to-market gains on commodity purchase and sale transactions and higher related hedges entered into by the unregulated subsidiaries ($6.5 million), compared to a loss of on these types of transactions in the six months ended June 30, 2001 ($7.8 million). In addition, the increase reflects the cessation of goodwill amortization in accordance with Statement of Financial Accounting Standard No. 142 ($5.5 million; see "New Financial Accounting Standards" in Note A to the Con Edison financial statements included in Item 8 of the Form 10-K), increased allowance for equity funds used during construction of $5.6 million as a result of the East River

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re-powering project, and lower income taxes of $8.9 million attributable primarily to the recognition of tax benefits relating to the September 2001 sale of Con Edison of New York's nuclear generating unit and the write-down of the NEON investment.

Net Interest Charges

Net interest charges decreased $4.1 million in the six months ended June 30, 2002 compared to the 2001 period, reflecting principally decreased interest expense on long-term debt of $4.4 million.

Unregulated Businesses

Earnings for the unregulated subsidiaries increased $7.3 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The increase is due principally to higher electric retail sales volumes and higher electric retail gross margins, offset in part by the write-down of an unregulated subsidiary's investment in NEON of $5.2 million after tax.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CON EDISON OF NEW YORK

Consolidated Edison Company of New York, Inc. (Con Edison of New York) is a regulated utility that provides electric service to over 3.1 million customers and gas service to over 1.1 million customers in New York City and Westchester County. It also provides steam service in parts of Manhattan. All of the common stock of Con Edison of New York is owned by Consolidated Edison, Inc. (Con Edison).

This discussion and analysis should be read in conjunction with Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in Item 7 of the combined Con Edison, Con Edison of New York and Orange and Rockland Utilities, Inc. (O&R) Annual Reports on Form 10-K for the year ended December 31, 2001 (File Nos. 1-14514, 1-1217 and 1-4315, the Form 10-K) and Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of the combined Con Edison, Con Edison of New York and O&R Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2002. Reference is also made to the notes to the Con Edison of New York financial statements in Part I, Item 1 of this report, which notes are incorporated herein by reference.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Con Edison of New York's financial statements reflect the application of its accounting policies, which conform to accounting principles generally accepted in the United States. The company's critical accounting policies include industry-specific accounting applicable to regulated public utilities and accounting for pensions and other postretirement benefits and contingencies.

The application of certain of these accounting policies requires the company to use estimates. Such estimates require the company to make assumptions about matters that are highly uncertain and for which different estimates that also could reasonably have been used could have had a material impact on the company's financial condition or results of operations.

Accounting for Regulated Public Utilities—SFAS No. 71

Con Edison of New York is a regulated public utility subject to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," and, in accordance with SFAS No. 71, subject to the accounting requirements and rate making practices of the Federal Energy Regulatory Commission (FERC) and state public utility regulatory authorities. See "Critical Accounting Policies" in Con Edison of New York's Form 10-K MD&A and Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Accounting for Pensions and Other Postretirement Benefits

Con Edison of New York has pension and other postretirement plans that cover substantially all employees and retirees. The company accounts for these plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions" and SFAS No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." In applying these accounting policies, the company has made critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets, future compensation and health cost increase trends, and appropriate discount rates. See Notes D and E

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to the Con Edison of New York financial statements included in Item 8 of the Form 10-K for information about these assumptions, actual performance, amortization of investment and other actuarial gains and losses and calculated plan costs for 2001, 2000 and 1999. Plan expense or credit in future periods will depend on the assumptions the company makes and actual performance.

Accounting for Contingencies

SFAS No. 5, "Accounting for Contingencies," applies to an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. The company's known material contingencies include proceedings relating to outages at the nuclear generating unit the company sold in 2001, workers' compensation claims and its responsibility for hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs), and coal tar that have been used or generated in the course of its operations and may be present in its facilities and equipment. See Notes B and C to the Con Edison of New York financial statements included in Part I, Item 1 of this report. In accordance with SFAS No. 5, the company has accrued its best estimate of its probable losses relating to these contingencies and no liability has been accrued where the loss is not probable or the amount of the loss cannot be reasonably estimated.

LIQUIDITY AND CAPITAL RESOURCES

Con Edison of New York's liquidity is dependent on its cash flows from its operating, investing and financing activities listed on the accompanying consolidated statement of cash flows and discussed below. As a result of these activities, cash and temporary cash investments decreased $230.8 million during the first six months of 2002.

Cash Flows from Operating Activities

Net cash flows from operating activities during the first six months of 2002 were $368.6 million, $13.2 million less than the first six months of 2001. This decrease reflects principally lower net income, increased accounts receivable and higher recoverable energy costs, offset in part by increased accounts payable.

Con Edison of New York's customer accounts receivable, less allowance for uncollectible accounts, increased $4.1 million at June 30, 2002 compared with year-end 2001. The company's equivalent number of days of revenue outstanding (ENDRO) was 26.3 days at June 30, 2002 compared with 29.6 days at December 31, 2001. The decrease in ENDRO is due to the decreases in receivables under payment agreements and level billing accounts.

Other accounts receivable increased $121.2 million at June 30, 2002 compared with year-end 2001 due primarily to a $95.1 million federal tax refund in connection with the company's calculation of its repair allowance deductions and other matters.

Accrued pension credits increased $170.9 million at June 30, 2002 compared with year-end 2001, reflecting favorable past performance in the company's pension fund and assumptions about performance. See Note D to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Accounts payable increased $41.1 million at June 30, 2002 compared with year-end 2001, due primarily to a higher level of energy purchases in June 2002 as compared to December 2001.

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The regulatory asset for deferred recoverable energy costs increased $96.7 million at June 30, 2002 compared with year-end 2001, due primarily to the deferral for future recovery of purchased power and gas costs, offset in part by the ongoing recovery of previously deferred amounts. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Other-net assets increased $176.1 million at June 30, 2002 compared with year-end 2001 due primarily from the following items:

		Effect on Cash
		(Millions of Dollars)
Sale of nuclear generating unit		$	45.8
Pension and benefit reserves			37.2
Accrued taxes			(52.5	)
Proceeds from auction of the transmission congestion contracts			73.9
Capitalized construction			30.5
Other			41.2
		$	176.1

The regulatory asset associated with Con Edison of New York's sale of its nuclear generating unit in September 2001 decreased $45.8 million at June 30, 2002, compared with year-end 2001. This regulatory asset was established for the recovery from customers of the net after-tax loss on the sale. The decrease reflects the recognition in 2002 of $30.4 million of New York State tax benefits that were not reflected in the net after-tax loss when the regulatory asset was established (which reduced the net after-tax loss to $145 million) and the recovery from customers in 2002 of $15.4 million pursuant to rate provisions approved in September 2001 by the New York State Public Service Commission (PSC). Pursuant to these provisions, net revenues have been reduced to reflect that Con Edison of New York no longer has costs associated with the nuclear generating unit. Annual revenues include $35 million that is being used to amortize the regulatory asset. The electric rate agreement approved by the PSC in November 2000 provides that the company "will be given a reasonable opportunity to recover stranded and strandable costs remaining at March 31, 2005, including a reasonable return on investments." See Notes A and I to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Pension and benefits reserves increased $37.2 million at June 30, 2002 compared with year-end 2001, due primarily to an increase of $33.0 million in the cost of postretirement benefits other than pensions (OPEB). The reserve represents OPEB costs that have been recognized in income but not funded, and also includes a minimum liability for supplemental retirement programs, a portion of which has been included in other comprehensive income. See Note E to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Accrued taxes decreased $52.5 million at June 30, 2002 compared with year-end 2001. Due to the World Trade Center attack, the Federal government extended to January 2002 the due date for final payment of 2001 estimated income taxes. As a result, the payment normally made in December was not made until mid-January 2002.

Proceeds from the auction of transmission congestion contracts increased $73.9 million at June 30, 2002 compared with year-end 2001. The company sells rights to use its transmission system for specified

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periods of time, pursuant to procedures established by the New York Independent System Operator (NYISO). These auction proceeds are deferred for customer benefit, as directed by the PSC.

Cash Flows Used in Investing and Financing Activities

Net cash flows used in investing activities during the first six months of 2002 increased $111.6 million compared with the first six months of 2001, reflecting increased construction expenditures in the first six months of 2002 as compared with 2001 ($34.1 million) and the receipt in 2001 of proceeds from the sale of the company's 480 MW interest in the Roseton generating station ($100.0 million, net of federal income tax). Construction expenditures increased in 2002 principally to meet load growth on the company's electric distribution system and to effect permanent restoration of portions of the electric, gas and steam systems in lower Manhattan following the World Trade Center attack.

Net cash flows from financing activities during the first six months of 2002 increased $73.7 million compared with the first six months of 2001, reflecting principally lower external borrowings and decreased debt redemptions, offset in part by increased net proceeds from commercial paper.

In February 2002, Con Edison of New York redeemed at maturity $150 million of 6.6 percent 9-year debentures. In June 2002, Con Edison of New York redeemed at maturity $150 million of variable rate 5-year debentures and issued $300 million of non-callable 5.625 percent 10-year debentures.

Capital Resources and Requirements

There have been no material changes in the company's capital resources or capital requirements from those reflected in the Form 10-K. In August 2002, President Bush signed into law an appropriations bill, which authorizes funds for which the company is eligible to apply to recover costs it incurred in connection with the World Trade Center attack. For additional information, see "Cash Flows Used in Investing and Financing Activities," above, "Capital Resources" and "Capital Requirements" in Con Edison of New York's Form 10-K MD&A and Note P to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's ratio of earnings to fixed charges (for the periods ended on the date indicated) and common equity ratio (as of the date indicated) were:

				Twelve Months Ended
		Six Months Ended June 30, 2002		June 30, 2002		December 31, 2001
Earnings to fixed charges		3.05		3.56		3.66
Common equity ratio*		46.8		46.8		47.2

*

Common shareholders' equity as a percentage of total capitalization

Con Edison of New York's ratio of earnings to fixed charges decreased for the 12-month period ending June 30, 2002 compared to the 12-month period ending December 31, 2001 primarily as a result of decreased earnings.

Contractual Obligations and Commercial Commitments

Reference is made to "Contractual Obligations and Commercial Commitments" in Con Edison of New York's Form 10-K MD&A. At June 30, 2002 there was no material change in the company's contractual obligations and commercial commitments compared to those at December 31, 2001, other than the long-term debt transactions described under "Cash Flows Used in Investing and Financing Activities," above.

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Energy Trading Net Assets Accounted For at Fair Value

Con Edison of New York has not engaged to a material extent in trading activities that are accounted for at fair value. See "Financial Market Risks," below and Note O to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Regulatory Matters

In April 2002, the PSC approved a three-year gas rate agreement that reduces retail sales and transportation rates by approximately $25 million, on an annual basis. Reference is made to "Regulatory Matters" in Con Edison of New York's Form 10-K MD&A.

In July 2002, FERC issued a notice of proposed rulemaking on a standard market design for the wholesale electricity market. FERC indicated that it was undertaking standard market design to create consistent wholesale competitive markets and efficient transmission systems in order to reduce costs to customers and improve reliability. The notice proposes to establish a single open access transmission tariff that would apply to all transmission customers: wholesale, unbundled retail and bundled retail service. Other pricing, monitoring, operational and governance matters are also addressed in the notice, which the company is in the process of reviewing. For information about the company's transmission facilities, see "Con Edison of New York—Electric Supply" in Item 1 of the Form 10-K, "Regulatory Matters—Electric Supply" in Con Edison of New York's 10-K MD&A and Item 2 of the Form 10-K.

FINANCIAL MARKET RISKS

Con Edison of New York's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments are interest rate risk and commodity price risk.

Interest Rate Risk

The interest rate risk relates primarily to variable rate debt and to new debt financing needed to fund capital requirements, including utility construction expenditures and maturing debt securities.

Con Edison of New York manages interest rate risk through the issuance of mostly fixed-rate debt with varying maturities and through opportunistic refunding of debt. The company estimates that, as of June 30, 2002, a 10 percent change in interest rates applicable to its variable rate debt would result in a change in annual interest expense of approximately $1.7 million.

In addition, Con Edison of New York, from time to time, has entered into derivative financial instruments to hedge interest rate risk on certain debt securities and may use derivative financial instruments to hedge interest rate risk or changes in fair value of certain debt securities. See "Interest Rate Hedging" in Note D to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

Commodity Price Risk

Con Edison of New York's commodity price risk relates primarily to the purchase of electricity and gas that the company delivers to its customers. Con Edison of New York has risk management strategies to mitigate its related exposure and uses derivative instruments to hedge this price risk. See "Energy Price Hedging" in Note D to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

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Con Edison of New York estimates that, as of June 30, 2002, a 10 percent change in market prices would result in a change in fair value of approximately $14.4 million for the derivative instruments used by it to hedge purchases of electricity and gas. The company expects that any such change in fair value would be largely offset by directionally opposite changes in the cost of the electricity and gas purchased. In general, the rates Con Edison of New York charges customers for electric, gas and steam service are subject to change for fluctuations in the cost of purchased power or gas, including gains or losses on such derivative instruments and related transaction costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Environmental Matters

For information concerning potential liabilities of Con Edison of New York arising from laws and regulations protecting the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund), see Note B to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

RESULTS OF OPERATIONS

Second Quarter of 2002 Compared with Second Quarter of 2001

Con Edison of New York's net income for common stock for the second quarter of 2002 was $97.2 million compared with $102.9 million for the second quarter of 2001. The company's net income in the 2002 period reflects the impact of the softness in the economy, partially offset by lower operating expenses. A comparison of the results of operations of Con Edison of New York for the second quarter of 2002 with the results for the second quarter of 2001 follows:

THREE MONTHS ENDED JUNE 30, 2002 COMPARED WITH
THREE MONTHS ENDED JUNE 30, 2001

		Increases (Decreases) Amount			Increases (Decreases) Percent
		(Millions of Dollars)
Operating revenues		$	(187.2	)	(10.7	)%
Purchased power - electric and steam			(33.7	)	(5.7	)
Fuel - electric and steam			(5.3	)	(11.6	)
Gas purchased for resale			(36.8	)	(27.6	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)			(111.4	)	(11.3	)
Other operations and maintenance			(69.2	)	(20.4	)
Depreciation and amortization			(12.8	)	(10.5	)
Taxes, other than income tax			12.6		5.3
Income tax			(28.6	)	(34.2	)
Operating income			(13.4	)	(6.7	)
Other income less deductions and related income tax			3.2		190.7
Net interest charges			(4.5	)	(4.8	)
Net income for common stock		$	(5.7	)	(5.5	)%

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A discussion of Con Edison of New York's operating revenues and operating income by business segment follows. Con Edison of New York's principal business segments are its regulated electric, gas and steam utility businesses. For additional information about the segments, see Note E to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

Electric

Con Edison of New York's electric operating revenues in the second quarter of 2002 decreased $113.8 million compared with the second quarter of 2001. The decrease reflects net revenue reductions of approximately $63.1 million related to the sale of the company's nuclear generating unit in September 2001 (as discussed above under "Cash Flows from Operating Activities") and lower fuel and purchased power costs of $20.2 million (discussed below). The decrease also reflects the completion on March 31, 2002 of the one-year amortization of the previously deferred gain on the sale of divested plants and the New York Power Authority (NYPA) revenue increase ($21.7 million). See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Notes A and I to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's electric sales and deliveries, excluding off-system sales, for the second quarter of 2002 compared with the second quarter of 2001 were:

MILLIONS OF KWHRS.

Description			Three Months Ended June 30, 2002		Three Months Ended June 30, 2001		Variation		Percent Variation
Residential/Religious			2,629		2,596		33		1.3	%
Commercial/Industrial			4,517		4,680		(163	)	(3.5	)
Other			44		53		(9	)	(17.0	)
	Total Full Service Customers		7,190		7,329		(139	)	(1.9	)
Retail Choice Customers			2,687		2,415		272		11.3
	Sub-total		9,877		9,744		133		1.4
NYPA, Municipal Agency and Other Sales			2,516		2,433		83		3.4
	Total Service Area		12,393		12,177		216		1.8	%

Electricity sales and delivery volumes in Con Edison of New York's service territory increased 1.8 percent in the second quarter of 2002 compared with the second quarter of 2001. The increase in sales volume reflects primarily the warmer weather compared to the 2001 period. After adjusting for variations, principally weather and billing days in each period, electricity sales volume in the service territory increased 1.0 percent in the second quarter of 2002 compared with the second quarter of 2001. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison of New York's purchased power costs decreased $32.2 million in the second quarter of 2002 compared with the second quarter of 2001, due to a decrease in the price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by increased purchased volumes resulting from the sale of the company's

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nuclear generating unit in September 2001. Fuel costs increased $12.0 million due to an increase in the price of fuel, offset in part by a decrease in volumes as a result of decreased generation at company-owned powerplants. In general, Con Edison of New York recovers prudently incurred purchased fuel and power costs pursuant to rate provisions approved by the PSC. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's electric operating income decreased $2.5 million in the second quarter of 2002 compared with the second quarter of 2001. The principal component of the decrease was a decrease in net revenues (operating revenues less fuel and purchased power costs) of $93.6 million. The decrease in net revenues reflects the completion on March 31, 2002 of the one-year amortization of the previously deferred gain on the sale of divested plants and the NYPA revenue increase ($21.7 million) and net revenue reductions ($72.2 million) related to the sale of the nuclear generating unit. The decrease in net revenues is offset in part by reduced other operations and maintenance expenses of $67.5 million, decreased depreciation expense of $14.0 million and reduced property tax expense of $2.5 million, resulting primarily from the sale.

Gas

Con Edison of New York's gas operating revenues decreased $54.2 million, while the cost of purchased gas decreased by $36.8 million in the second quarter of 2002 compared with the 2001 period. The lower revenues reflect reduced sales to gas customers, resulting primarily from the unusual weather and revenue reductions implemented in accordance with the gas rate agreement approved by the PSC in April 2002. Gas operating income decreased $11.9 million in the second quarter of 2002, reflecting the $17.4 million decrease in net revenues (operating revenues less gas purchased for resale), as well as increased property tax expense ($10.3 million) and increased expenses for customer related services ($1.8 million), offset in part by reduced transmission and distribution expenses ($3.2 million) and reduced income taxes ($15.7 million).

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Con Edison of New York's gas sales and deliveries, excluding off-system sales, for the second quarter of 2002 compared with the second quarter of 2001 were:

THOUSANDS OF DKTHS.

Description			Three Months Ended June 30, 2002		Three Months Ended June 30, 2001		Variation		Percent Variation
Firm Sales
Residential			8,627		9,368		(741	)	(7.9	)%
General			6,940		7,635		(695	)	(9.1	)
Firm Transportation			3,527		2,980		547		18.3
	Total Firm Sales and Transportation		19,094		19,983		(889	)	(4.4	)
Off Peak/Interruptible Sales			2,911		2,803		108		3.9
Transportation of Customer Owned Gas
NYPA			4,544		1,546		2,998		193.9
Divested Plants			20,011		15,871		4,140		26.1
Other			5,960		2,996		2,964		98.9
	Total Sales and Transportation		52,520		43,199		9,321		21.6	%

Con Edison of New York's gas sales and transportation volumes for firm customers decreased 4.4 percent in the second quarter of 2002 compared with the second quarter of 2001. After adjusting for variations, principally weather and billing days, in each period, firm gas sales and transportation volumes in the company's service territory increased 0.3 percent in the 2002 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

The increase in non-firm transportation of customer-owned gas is attributable primarily to reduced gas prices as compared to oil prices.

A weather-normalization provision that applies to Con Edison of New York's gas business moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $19.2 million and steam operating income increased $1.1 million for the second quarter of 2002 compared with the second quarter of 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased steam power costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. The increase in operating income reflects primarily reduced transmission and distribution expenses ($0.7 million) and reduced income taxes ($5.8 million), offset in part by a decrease in net revenues (operating revenues less fuel and purchased power costs) of $0.4 million and increased revenue taxes of $4.7 million.

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Con Edison of New York's steam sales and deliveries for the second quarter of 2002 compared with the second quarter of 2001 were:

MILLIONS OF POUNDS

Description			Three Months Ended June 30, 2002		Three Months Ended June 30, 2001		Variation		Percent Variation
General			86		90		(4	)	(4.4	)%
Apartment house			1,297		1,356		(59	)	(4.4	)
Annual power			3,099		3,261		(162	)	(5.0	)
	Total Sales		4,482		4,707		(225	)	(4.8	)%

Steam sales volume decreased 4.8 percent in the 2002 period compared with the 2001 period, primarily as a result of the unusual weather. After adjusting for variations, principally weather and billing days, in each period, steam sales volume decreased 5.5 percent.

Other Income

Other income increased $3.2 million in the second quarter of 2002 compared to the second quarter of 2001, due to reduced income taxes of $1.5 million and an increase in allowance for equity funds used during construction of $1.7 million as a result of the East River re-powering project.

Net Interest Charges

Net interest charges decreased $4.5 million in the second quarter of 2002 compared to the 2001 period, reflecting principally decreased interest on long-term debt of $4.4 million.

Six Months Ended June 30, 2002 Compared with Six Months Ended June 30, 2001

Con Edison of New York's net income for common stock for the six months ended June 30, 2002 was $247.9 million compared with $274.7 million for the six months ended June 30, 2001. The company's net income in the 2002 period reflects the impact of the unusually mild winter and softness in the economy, partially offset by lower operating expenses.

A comparison of the results of operations of Con Edison of New York for the six months ended June 30, 2002 with the results for the six months ended June 30, 2001 follows:

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SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2001

		Increases (Decreases) Amount			Increases (Decreases) Percent
		(Millions of Dollars)
Operating revenues		$	(867.0	)	(20.7	)%
Purchased power - electric and steam			(260.1	)	(18.9	)
Fuel - electric and steam			(114.8	)	(53.1	)
Gas purchased for resale			(221.4	)	(44.4	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)			(270.7	)	(12.9	)
Other operations and maintenance			(124.4	)	(18.4	)
Depreciation and amortization			(25.4	)	(10.5	)
Taxes, other than income tax			(26.7	)	(5.1	)
Income tax			(43.0	)	(22.3	)
Operating income			(51.3	)	(11.0	)
Other income less deductions and related income tax			17.1		309.8
Net interest charges			(7.3	)	(3.8	)
Net income for common stock		$	(26.9	)	(9.8	)%

A discussion of Con Edison of New York's operating revenues and operating income by business segment follows. Con Edison of New York's principal business segments are its regulated electric, gas and steam utility businesses. For additional information about the segments, see Note E to the Con Edison of New York financial statements included in Part I, Item 1 of this report.

Electric

Con Edison of New York's electric operating revenues in the six months ended June 30, 2002 decreased $488.2 million compared with the six months ended June 30, 2001. The decrease reflects net revenue reductions of approximately $161.2 million (attributable primarily to the sale of the company's nuclear generating unit as discussed above under "Cash Flows from Operating Activities" and the April 2001 rate reduction), lower fuel and purchased power costs of $271.1 million (discussed below), reduced sales and deliveries of $15.8 million resulting from the mild winter weather and economic slowdown, and a reserve of $16.1 million related to the sale of the company's nuclear generating unit. See "Recoverable Energy Costs" and "Rate and Restructuring Agreements" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

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Con Edison of New York's electric sales and deliveries, excluding off-system sales, for the six months ended June 30, 2002 compared with the six months ended June 30, 2001 were:

MILLIONS OF KWHRS.

Description			Six Months Ended June 30, 2002		Six Months Ended June 30, 2001		Variation		Percent Variation
Residential/Religious			5,396		5,446		(50	)	(1.0	)%
Commercial/Industrial			8,966		9,569		(603	)	(6.3	)
Other			76		88		(12	)	(13.6	)
	Total Full Service Customers		14,438		15,103		(665	)	(4.4	)
Retail Choice Customers			5,360		4,865		495		10.2
	Sub-total		19,798		19,968		(170	)	(1.0	)
NYPA, Municipal Agency and Other Sales			4,897		4,990		(93	)	(1.9	)
	Total Service Area		24,695		24,958		(263	)	(1.0	)%

Electricity sales volume in Con Edison of New York's service territory decreased 1.0 percent in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The decrease in sales volume reflects the extremely mild winter weather compared to the 2001 period. After adjusting for variations, principally weather and billing days, in each period, electricity sales volume in the service territory decreased 0.1 percent in the 2002 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

Con Edison of New York's purchased power costs decreased $237.0 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001, due to a decrease in the price of purchased power and an increase in volumes of electricity purchased from other suppliers by participants in the company's Retail Choice programs, offset in part by the company's increased purchased volumes resulting from the sale of the company's nuclear generating unit in September 2001. Fuel costs decreased $34.1 million as a result of decreased generation at company-owned power plants, offset in part by an increase in the price of fuel. In general, Con Edison of New York recovers prudently incurred purchased fuel and power costs pursuant to rate provisions approved by the PSC. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K.

Con Edison of New York's electric operating income decreased $26.8 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The principal component of the decrease was lower net revenues (operating revenues less fuel and purchased power costs) of $217.1 million. The decrease in net revenues reflects lower sales due principally to weather and economic conditions ($15.8 million), a reserve related to the sale of the company's nuclear generating unit ($16.1 million) and net revenue reductions ($161.2 million). The decrease in net revenues is offset in part by reduced other operations and maintenance expenses ($115.3 million), lower depreciation expense ($27.9 million) and lower property taxes ($5.1 million) resulting primarily from the sale in September 2001 of the company's nuclear generating unit. The decrease also reflects lower revenue taxes of $23.2 million.

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Gas

Con Edison of New York's gas operating revenues decreased $242.8 million, while the cost of purchased gas decreased by $221.4 million in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The lower revenues reflect reduced sales to gas customers, resulting primarily from the very mild winter weather. Gas operating income decreased $12.4 million in the six months ended June 30, 2002, reflecting the $21.4 million decrease in net revenues (operating revenues less gas purchased for resale), as well as increased property tax expense ($15.6 million), offset in part by reduced transmission and distribution expenses ($7.5 million), and reduced revenue taxes ($10.6 million).

Con Edison of New York's gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2002 compared with the six months ended June 30, 2001 were:

THOUSANDS OF DKTHS.

Description			Six Months Ended June 30, 2002		Six Months Ended June 30, 2001		Variation		Percent Variation
Firm Sales
Residential			28,000		33,439		(5,439	)	(16.3	)%
General			19,485		22,872		(3,387	)	(14.8	)
Firm Transportation			9,436		9,129		307		3.4
	Total Firm Sales and Transportation		56,921		65,440		(8,519	)	(13.0	)
Off-Peak/Interruptible Sales			6,955		8,630		(1,675	)	(19.4	)
Transportation of Customer Owned Gas
NYPA			8,764		1,576		7,188		Large
Divested Plants			34,227		18,643		15,584		83.6
Other			13,524		6,834		6,690		97.9
	Total Sales and Transportation		120,391		101,123		19,268		19.1	%

Con Edison of New York's gas sales and transportation volumes for firm customers decreased 13.0 percent in the six months ended June 30, 2002 compared with the six months ended June 30, 2001. After adjusting for variations, principally weather and billing days, in each period, firm gas sales and transportation volumes in the company's service territory decreased 0.1 percent in the 2002 period. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed.

The decrease in interruptible sales is due primarily to the unusually mild winter of 2002. The increase in non-firm transportation is attributable primarily to reduced gas prices as compared to oil prices.

A weather-normalization provision that applies to Con Edison of New York's gas business moderates, but does not eliminate, the effect of weather-related changes on gas operating income.

Steam

Con Edison of New York's steam operating revenues decreased $136.0 million and steam operating income decreased $12.1 million for the six months ended June 30, 2002 compared with the six months ended June 30, 2001. The lower revenues reflect reduced sales volumes and lower fuel and purchased

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steam power costs. See "Recoverable Energy Costs" in Note A to the Con Edison of New York financial statements included in Item 8 of the Form 10-K. The decrease in operating income reflects primarily a decrease in net revenues (operating revenues less fuel and purchased power costs) of $32.2 million, offset in part by lower income taxes ($16.5 million) and revenue taxes ($1.8 million).

Con Edison of New York's steam sales and deliveries for the six months ended June 30, 2002 compared with the six months ended June 30, 2001 were:

MILLIONS OF POUNDS

Description			Six Months Ended June 30, 2002		Six Months Ended June 30, 2001		Variation		Percent Variation
General			388		501		(113	)	(22.6	)%
Apartment house			3,925		4,603		(678	)	(14.7	)
Annual power			8,104		10,086		(1,981	)	(19.6	)
	Total Sales		12,417		15,190		(2,773	)	(18.3	)%

Steam sales volume decreased 18.3 percent in the six months ended June 30, 2002 compared with the six months ended June 30, 2001, reflecting primarily the warm winter weather. After adjusting for variations, principally weather and billing days, in each period, steam sales volume decreased 4.4 percent.

Other Income

Other income increased $17.1 million in the six months ended June 30, 2002 compared to the six months ended June 30, 2001, due to reduced income taxes of $9.0 million attributable primarily to the recognition of tax benefits relating to the September 2001 sale of the company's nuclear generating unit and an increase in the allowance for equity funds used during construction of $5.6 million as a result of the East River re-powering project.

Net Interest Charges

Net interest charges decreased $7.3 million in the six months ended June 30, 2002 compared to the six months ended June 30, 2001, reflecting principally decreased interest expense on long-term debt of $9.1 million.

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O&R MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

Orange and Rockland Utilities, Inc. (O&R), is a wholly owned subsidiary of Consolidated Edison, Inc. (Con Edison) and meets the conditions specified in General Instruction H to Form 10-Q, which allows it to use the reduced disclosure format for wholly owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, this O&R Management's Narrative Analysis of the Results of Operations is included in this report, and O&R has omitted from this report the information called for by Part I, Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations). Results for interim periods are not necessarily indicative of results for the entire fiscal year.

O&R's net income for common stock for the six-month period ended June 30, 2002 was $19.5 million, $2.6 million higher than the corresponding 2001 period. The increase in the company's net income was attributable primarily to higher electric sales, which produced an additional $1.2 million of net electric revenues, lower customer bad debt and other expenses ($3.3 million), savings in financing costs ($1.1 million) and income tax benefits ($0.5 million). Partially offsetting these items were lower gas sales resulting in lower net gas revenues of $1.3 million and reduced customer late payment charge revenues of $1.1 million. Customer late payment charge revenues decreased by 47.8 percent, primarily as a result of a decrease in the cost of energy billed to customers.

A comparison of the results of operations of O&R for the six months ended June 30, 2002 to the six months ended June 30, 2001 follows:

(Millions of Dollars)		Increases (Decreases) Amount			Increases (Decreases) Percent
Operating revenues		$	(100.4	)	(25.0	)%
Purchased power - electric			(51.1	)	(35.3	)
Gas purchased for resale			(45.1	)	(46.4	)
Operating revenues less purchased power, fuel and gas purchased for resale (net revenues)			(4.2	)	(2.6	)
Other operation and maintenance expenses			(3.3	)	(4.6	)
Depreciation and amortization			0.6		3.9
Taxes, other than income tax			(2.8	)	(10.0	)
Income tax			(1.1	)	(7.6	)
Operating income			2.4		8.3
Other income less deductions and related income tax			(0.5	)	(72.9	)
Net interest charges			(0.7	)	(5.9	)
Net income for common stock		$	2.6		15.3	%

A discussion of O&R's operating revenues by business segment follows. O&R's principal business segments are its electric and gas utility businesses. For additional information about O&R's business segments, see Note E to the O&R financial statements included in Part I, Item 1 of this report.

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Electric

Electric operating revenues decreased $52.2 million during the six months ended June 30, 2002 compared to the 2001 period. This decrease was primarily the result of lower purchased power and tax costs and recoveries in the 2002 period. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the combined O&R, Con Edison and Consolidated Edison Company of New York, Inc. Annual Reports on Form 10-K for the year ended December 31, 2001 (file Nos. 1-4315, 1-14514 and 1-1217, the Form 10-K).

O&R's electric sales and deliveries, excluding off-system sales, for the six months ended June 30, 2002 compared with the six months ended June 30, 2001 were:

MILLIONS OF KWHRS

Description			Six Months Ended June 30, 2002		Six Months Ended June 30, 2001		Variation		Percent Variation
Residential/Religious			801,570		852,916		(51,346	)	(6.0	)%
Commercial/Industrial			1,176,503		1,290,917		(114,414	)	(8.9	)
Other			51,112		50,774		338		0.7
	Total Full Service Customers		2,029,185		2,194,607		(165,422	)	(7.5	)
Retail Choice Customers			545,747		320,744		225,003		70.2
	Total Service Area		2,574,932		2,515,351		59,581		2.4	%

Electric sales volumes in the six months ended June 30, 2002 increased 2.4 percent compared to the 2001 period due to customer growth and higher average usage. After adjusting for weather variations, total electricity sales volumes were 4.4 percent higher in the current year. Weather-adjusted sales represent an estimate of the sales that would have been made if historical average weather conditions had prevailed. Net electric revenues (operating revenues less purchased power and associated tax recoveries) were $1.2 million higher in the current period.

Purchased power costs decreased $51.1 million during the first half of 2002 compared to the 2001 period, reflecting decreases in the unit cost of purchased power, partially offset by higher energy requirements.

Decreased electric revenues and purchased power costs also reflect increased purchases of electricity by customers from other suppliers.

Electric operating income increased $1.3 million during the six months ended June 30, 2002, compared to the 2001 period. This increase reflects the impact of higher net electric revenues, and lower customer bad debt and other expenses.

Gas

Gas operating revenues decreased $48.2 million during the six months ended June 30, 2002, compared to the 2001 period. This decrease was primarily the result of lower gas costs in the 2002 period. See "Recoverable Energy Costs" in Note A to the O&R financial statements in Item 8 of the Form 10-K.

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O&R's gas sales and deliveries, excluding off-system sales, for the six months ended June 30, 2002 compared with the six months ended June 30, 2001 were:

THOUSANDS OF DKTHS.

Description			Six Months Ended June 30, 2002		Six Months Ended June 30, 2001		Variation		Percent Variation
Firm Sales
	Residential		6,115		8,232		(2,117	)	(25.7	)%
	General		1,975		2,869		(894	)	(31.2	)
	Firm Transportation		3,380		2,470		910		36.8
Total Firm Sales and Transportation			11,470		13,571		(2,101	)	(15.5	)
	Off Peak/Interruptible Sales		3,778		3,150		628		19.9
Transportation of Customer Owned Gas
	Divested Plants		5,853		2,893		2,960		102.3
	Other		574		597		(23	)	(3.9	)
	Total Sales and Transportation		21,675		20,211		1,464		7.2	%

Total gas sales volumes in the six months ended June 30, 2002 decreased 15.5 percent compared to the 2001 period. O&R's revenues from gas sales in New York are subject to a weather normalization clause that moderates, but does not eliminate, the effect of weather-related changes on net income. After adjusting for weather variations in each period, total firm sales and transportation volumes were 7.5 percent lower for the 2002 period compared to the 2001 period.

The cost of gas purchased for resale decreased $45.1 million in the 2002 period compared to the 2001 period, due to the lower sales volumes and unit costs.

Decreased gas revenues and cost of gas purchased for resale in the 2002 period, compared to 2001, also reflect increased purchases of gas by customers from other suppliers.

Gas operating income increased by $0.9 million for the six months ended June 30, 2002, compared to the 2001 period, due primarily to lower operation and maintenance expenses, offset in part by lower net revenues.

Taxes Other Than Income Taxes

Taxes other than income taxes decreased by $2.8 million in the 2002 period compared to the 2001 period. The decrease was primarily the result of lower New York State revenue taxes, which resulted from reduced tax rates and lower energy costs billed to customers.

Other Income

Other income decreased $0.5 million in the 2002 period compared to the 2001 period, due primarily to lower earnings on short-term investments during the current year.

Net Interest Charges

Interest charges decreased by $0.7 million in the 2002 period compared to the 2001 period reflecting lower average debt balances and interest rates in the 2002 period, offset in part by lower allowance for borrowed funds used during construction.

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Income Taxes

Income taxes decreased $0.5 million in the 2002 period compared to the 2001 period, due to lower customer bad debt costs in the current period. Under existing rate agreements, the tax effects of changes in reserves, such as that for uncollectibles, flow through to net income.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Con Edison

For information about Con Edison's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see "Financial Market Risks" in Con Edison's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and Item 7A of the combined Con Edison, Con Edison of New York and O&R Annual Report on Form 10-K for the year ended December 31, 2001 (the Form 10-K), which information is incorporated herein by reference.

Con Edison of New York

For information about Con Edison of New York's primary market risks associated with activities in derivative financial instruments, other financial instruments and derivative commodity instruments, see "Financial Market Risks" in Con Edison of New York's Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 1, Item 2 of this report and Item 7A of the Form 10-K, which information is incorporated herein by reference.

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Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, intended to qualify for the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements of future expectation and not facts. Words such as "expects," "estimates," "anticipates," "intends," "plans," "will" and similar expressions identify forward-looking statements.

Actual results or developments might differ materially from those included in the forward-looking statements because of various factors such as:

•

continued restructuring of the regulated public utility, unregulated energy and telecommunications industries;



•

competition, including competition in the energy supply, trading and services businesses;



•

operating performance and condition of the company's energy delivery systems, generating assets and fiber optic communications network;



•

success of completion of ongoing construction projects;



•

legal proceedings relating to hazardous substances, the nuclear generating plant that the company sold in 2001 and Northeast Utilities (see Notes B, C and D to the Con Edison financial statements in Part 1, Item 1 of this report);



•

wholesale energy markets, including availability, sufficiency and cost of energy and the effectiveness of the company's efforts to manage its risks in these markets;



•

capital markets, including availability, sufficiency and cost of liquidity and credit facilities and the effectiveness of the company's efforts to manage its risks in these markets;



•

availability, sufficiency and cost of other services and goods used in Con Edison's business, including insurance coverage;



•

investment returns on the assets of the company's pension and other post-employment benefit plans and actual experience regarding the plans' other actuarial assumptions (see Notes D and E to the Con Edison financial statements in Item 8 of the Form 10-K);



•

employee matters, including changes in key executives and collective bargaining with union employees;



•

economic conditions, including recession, inflation or deflation;



•

technological developments;



•

weather, including its effects on the company's sales and facilities;



•

laws, regulations or regulatory policies, including those relating to taxes or fees, the environment and any that would adversely effect the ability of the company's regulated utility subsidiaries to operate or recover costs from their customers;

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•

public policy doctrines;



•

accounting matters, including changes in policies, principles and interpretations thereof generally accepted in the United States;



•

acts of war or terrorism; and



•

other presently unknown or unforeseen factors.

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PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Con Edison

Northeast Utilities

For information about legal proceedings relating to Con Edison's October 1999 agreement to acquire Northeast Utilities, see Note D to the Con Edison financial statements included in Part 1, Item 1 of this report (which information is incorporated herein by reference).

Con Edison of New York

Nuclear Generation

For information about legal proceedings relating to the nuclear generating unit that Con Edison of New York sold in 2001, see Note C to the Con Edison of New York financial statements included in Part 1, Item 1 of this report (which information is incorporated herein by reference).

Employees' Class Action

Reference is made to "Con Edison of New York—Employee's Class Action" in Item 3 of the Form 10-K. In August 2002, the new settlement agreement received fiscal approval from the court.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Con Edison

(a)    At the Annual Meeting of Stockholders of Con Edison on May 20, 2002, the stockholders of Con Edison voted to elect members of the Board of Directors, to ratify and approve the appointment of Con Edison's independent accountants, and not to adopt a stockholder proposal. 166,115,779 shares of Common Stock of Con Edison, representing approximately 78.14% of the 212,585,320 shares of Common Stock outstanding and entitled to vote, were present at the meeting in person or by proxy.

(b)    The name of each nominee for election as a member of Con Edison's Board of Directors and the number of shares voted for or with respect to which authority to vote for was withheld are as follows:

		Votes For		Votes Withheld
Vincent A. Calarco		163,676,816		2,438,963
George Campbell, Jr.		163,153,313		2,962,466
Gordon J. Davis		163,811,897		2,303,882
Michael J. Del Giudice		163,201,550		2,914,229
Joan S. Freilich		163,796,817		2,318,962
Ellen V. Futter		163,094,453		3,021,326
Sally Hernandez-Pinero		163,067,292		3,048,487
Peter W. Likins		163,741,084		2,374,695
Eugene R. McGrath		163,772,714		2,343,065
Richard A. Voell		163,763,660		2,352,119
Stephen R. Volk		163,786,602		2,329,177

(c)    The results of the vote on the appointment of PricewaterhouseCoopers LLP as independent accountants for Con Edison for 2002 were as follows: 161,072,164 shares were voted for this proposal; 3,358,452 shares were voted against the proposal; and 1,685,163 shares were abstentions.

84

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(d)    The following stockholder-proposed resolution was voted upon by the stockholders of Con Edison at the Annual Meeting:

"RESOLVED: That the shareholders recommend that the Board take the necessary step that Con Edison specifically identify by name and corporate title in all future proxy statements those executive officers, not otherwise so identified, who are contractually entitled to receive in excess of $250,000 annually as base salary, together with whatever other additional compensation bonuses and other cash payments were due them."

The results of the vote on this proposal were as follows: 15,151,507 shares were voted for this proposal; 106,597,261 shares were voted against the proposal; 4,710,358 shares were abstentions; and 39,656,653 shares were broker nonvotes.

Con Edison of New York

At the Annual Meeting of Stockholders of Con Edison of New York on May 20, 2002, all 235,488,094 outstanding shares of common stock of Con Edison of New York were voted to elect as members of Con Edison of New York's Board of Trustees management's nominees for the Board of Trustees (Vincent A. Calarco, George Campbell, Jr., Gordon J. Davis, Michael J. Del Giudice, Joan S. Freilich, Ellen V. Futter, Sally Hernandez-Pinero, Peter W. Likins, Eugene R. McGrath, Richard A. Voell and Stephen R. Volk), and to ratify and approve the appointment of PricewaterhouseCoopers LLP as Con Edison of New York's independent accountants for 2002. All of the common stock of Con Edison of New York is owned by Con Edison.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)

EXHIBITS

Con Edison

Exhibit 10.1.1		Amendment No. 1, effective May 31, 2002, to the Employment agreement, dated as of September 1, 2000, between Con Edison and Eugene R. McGrath.
Exhibit 10.1.2		Amendment No. 1, effective May 31, 2002, to the Employment agreement, dated as of September 1, 2000, between Con Edison and Joan S. Freilich.
Exhibit 10.1.3		Amendment No. 1, effective May 31, 2002, to the Employment agreement, dated as of September 1, 2000, between Con Edison and Kevin Burke.
Exhibit 10.1.4		Amendment No. 1, effective May 31, 2002, to the Employment agreement, dated as of September 1, 2000, between Con Edison and John D. McMahon.
Exhibit 10.1.5		Restricted Stock Unit Award Agreement, dated as of May 31, 2002, between Con Edison and Stephen B. Bram.
Exhibit 10.1.6		Description of the Consolidated Edison, Inc. Deferred Stock Compensation Plan For Non-Officer Directors.
Exhibit 12.1		Statement of computation of Con Edison's ratio of earnings to fixed charges for the six and twelve-month periods ended June 30, 2002 and the year ended December 2001.
Exhibit 99.1.1		Certification of chief executive officer required under Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.1.2		Certification of chief financial officer required under Section 906 of the Sarbanes-Oxley Act of 2002.

85

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Con Edison of New York

Exhibit 3.2		By-laws of Con Edison of New York, effective June 20, 2002.
Exhibit 10.2		The Consolidated Edison Thrift Savings Plan, amended and restated as of May 8, 2002.
Exhibit 12.2		Statement of computation of Con Edison of New York's ratio of earnings to fixed charges for the six and twelve-month periods ended June 30, 2002 and the year December 2001.
Exhibit 99.2.1		Certification of chief executive officer required under Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.2.2		Certification of chief financial officer required under Section 906 of the Sarbanes-Oxley Act of 2002.

O&R

Exhibit 99.3.1		Certification of chief executive officer required under Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.3.2		Certification of chief financial officer required under Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

REPORTS ON FORM 8-K 

Con Edison

Con Edison filed a Current Report on Form 8-K, dated May 13, 2002, announcing the death of a Board member and reporting the adoption of a resolution reducing the number of Directors. Con Edison filed a Current Report on Form 8-K, dated April 3, 2002, reporting (under Item 5) entering into an underwriting agreement for the issuance and sale of $325 million aggregate principal amount of its 7.25% Debentures, Series 2002 A, due 2042.

Con Edison of New York

Con Edison of New York filed a Current Report on Form 8-K, dated May 13, 2002, announcing the death of a Board member and reporting the adoption of a resolution to change the by-laws to reduce the number of Trustees. Con Edison of New York filed a Current Report on Form 8-K, dated June 19, 2002, reporting (under Item 5) entering into an underwriting agreement for the issuance and sale of $300 million aggregate principal amount of its 5.625% Debentures, Series 2002 A, due 2012.

O&R

O&R filed no Current Reports on Form 8-K during the quarter ended June 30, 2002.

86

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Consolidated Edison, Inc.
		Consolidated Edison Company of New York, Inc.
DATE: August 12, 2002		By:		/s/  JOAN S. FREILICH       Joan S. Freilich Executive Vice President, Chief Financial Officer and Duly Authorized Officer
		Orange and Rockland Utilities, Inc.
DATE: August 12, 2002		By:		/s/  EDWARD J. RASMUSSEN       Edward J. Rasmussen Vice President, Chief Financial Officer and Duly Authorized Officer

87

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QuickLinks

Table of Contents
Filing Format
Consolidated Edison, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED STATEMENT OF RETAINED EARNINGS (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Consolidated Edison, Inc. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Notes to Consolidated Financial Statements
Consolidated Edison of New York, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Consolidated Edison of New York, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Consolidated Edison Of New York, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Consolidated Edison Of New York, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Consolidated Edison Company of New York, Inc. CONSOLIDATED STATEMENT OF RETAINED EARNINGS (UNAUDITED)
Consolidated Edison Company of New York, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Consolidated Edison Company of New York, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Consolidated Edison Company of New York, Inc. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Notes to Consolidated Financial Statements
Orange and Rockland Utilities, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED STATEMENT OF RETAINED EARNINGS (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Orange and Rockland Utilities, Inc. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Notes to Financial Statements
SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2001

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

THREE MONTHS ENDED JUNE 30, 2002 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2001
SIX MONTHS ENDED JUNE 30, 2002 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2001
Forward-Looking Statements
Signatures

                                                                     Exhibit 3.2

================================================================================


                                    BY-LAWS

                                       OF

                           CONSOLIDATED EDISON COMPANY
                                OF NEW YORK, INC


                          Effective as of June 20, 2002


================================================================================



                                     BY-LAWS

                                       OF

                           CONSOLIDATED EDISON COMPANY
                                OF NEW YORK, INC.


                          Effective as of June 20, 2002


DATE ANNUAL MEETING

     SECTION 1.    The annual meeting of stockholders of the Company for the
election of Trustees and such other business as may properly come before such
meeting shall be held on the third Monday in May in each year at such hour and
at such place in the City of New York or the County of Westchester as may be
designated by the Board of Trustees.

SPECIAL MEETINGS STOCKHOLDERS

     SECTION 2.    Special meetings of the stockholders of the Company may be
held upon call of the Chairman of the Board, the Vice Chairman of the Board, the
President, the Board of Trustees, or stockholders holding one-fourth of the
outstanding shares of stock entitled to vote at such meeting.

NOTICE STOCKHOLDERS' MEETING

     SECTION 3.    Notice of the time and place of every meeting of
stockholders, the purpose of such meeting and, in case of a special meeting, the
person or persons by or at whose direction the meeting is being called, shall be
mailed by the Secretary, or other officer performing his duties, at least ten
days, but not more than fifty days, before the meeting to each stockholder of
record, at his last known Post Office address; provided, however, that if a
stockholder be present at a meeting, in person or by proxy, without protesting
prior to the conclusion of the meeting the lack of notice of such meeting, or in
writing waives notice thereof before or after the meeting, the mailing to such
stockholder of notice of such meeting is unnecessary.

QUORUM STOCKHOLDERS

     SECTION 4.    The holders of a majority of the outstanding shares of stock
of the Company, entitled to vote at a meeting, present in person or by proxy
shall constitute a quorum, but less than a quorum shall have power to adjourn.

CHAIRMAN, SECRETARY, STOCKHOLDERS' MEETINGS

     SECTION 5.    The Chairman of the Board, or in his absence the Vice
Chairman of the Board, or in his absence the President shall preside over all
meetings of stockholders. In their absence one of the Vice Presidents shall
preside over such meetings. The Secretary of the Board of Trustees shall act as
Secretary of such meeting, if present. In his absence, the Chairman of the
meeting may appoint any person to act as Secretary of the meeting.



                                      - 2 -

INSPECTORS OF ELECTION

     SECTION 6.    At each meeting of stockholders at which votes are to be
taken by ballot there shall be at least two and not more than five inspectors of
election and of stockholders' votes, who shall be either designated prior to
such meeting by the Board of Trustees or, in the absence of such designation,
appointed by the Chairman of the meeting.

STOCK TRANSFERS

     SECTION 7.    The Board of Trustees may, in their discretion, appoint one
or more transfer agents, paying agents and/or registrars of the stock of the
Company.

REGISTRARS, NUMBER OF BOARD MEMBERS, VACANCIES, FEES

     SECTION 8.    The affairs of the Company shall be managed under the
direction of a Board consisting of twelve Trustees, who shall be elected
annually by the stockholders by ballot and shall hold office until their
successors are elected and qualified. Vacancies in the Board of Trustees may be
filled by the Board at any meeting, but if the number of Trustees is increased
or decreased by the Board by an amendment of this section of the By-laws, such
amendment shall require the vote of a majority of the whole Board. Members of
the Board of Trustees shall be entitled to receive such reasonable fees or other
forms of compensation, on a per diem, annual or other basis, as may be fixed by
resolution of the Board of Trustees or the stockholders in respect of their
services as such, including attendance at meetings of the Board and its
committees; provided, however, that nothing herein contained shall be construed
as precluding any Trustee from serving the Company in any capacity other than as
a member of the Board or a committee thereof and receiving compensation for such
other services.

BOARD MEETINGS, NOTICES, QUORUM, PARTICIPATION BY CONFERENCE TELEPHONE, ACTION
BY UNANIMOUS WRITTEN CONSENT

     SECTION 9.    Meetings of the Board of Trustees shall be held at the time
and place fixed by resolution of the Board or upon call of the Chairman of the
Board, the Vice Chairman of the Board, the President, or a Vice President or any
two Trustees. The Secretary of the Board or officer performing his duties shall
give 24 hours' notice of all meetings of Trustees; provided that a meeting may
be held without notice immediately after the annual election of Trustees, and
notice need not be given of regular meetings held at times fixed by resolution
of the Board. Meetings may be held at any time without notice if all the
Trustees are present and none protests the lack of notice either prior to the
meeting or at its commencement, or if those not present waive notice either
before or after the meeting. Notice by mailing or telegraphing, or delivering by
hand, to the usual business address or residence of the Trustee not less than
the time above specified before the meeting shall be sufficient. A Majority of
the Trustees in office shall constitute a quorum, but less than such quorum
shall have power to adjourn. The Chairman of the Board or, in his absence the
Vice Chairman of the Board or, in his absence a Chairman pro tern elected by the
meeting from among the Trustees present shall preside at all meetings of the
Board. Any one or more members of the Board may participate in a special meeting
of the Board by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation



                                      - 3 -

by such means shall constitute presence in person at such special meeting. Any
action required or permitted to be taken by the Board may be taken without a
meeting if all members of the Board consent in writing to the adoption of a
resolution authorizing the action; provided, however, that no action taken by
the Board by unanimous written consent shall be taken in lieu of a regular
monthly meeting of the Board. Each resolution so adopted and the written
consents thereto by the members of the Board shall be filed with the minutes of
the proceedings of the Board.

ELECTION OF OFFICERS

     SECTION 10.   The Board of Trustees, as soon as may be after the election
of Trustees in each year, shall elect from their number a Chairman of the Board,
who shall be the chief executive officer of the Company, and shall elect a Vice
Chairman of the Board and a President. The Board shall also elect one or more
Vice Presidents, a Secretary and a Treasurer, and may from time to time elect
such other officers as they may deem proper. Any two or more offices may be held
by the same person, except the offices of President and Secretary.

TERM OF OFFICE, VACANCIES

     SECTION 11.   The term of office of all officers shall be until the next
election of Trustees and until their respective successors are chosen and
qualify, but any officer may be removed from office at any time by the Board of
Trustees, Vacancies among the officers may be filled by the Board of Trustees at
any meeting.

DUTIES OF EXECUTIVE OFFICERS, DUTIES OF OTHER OFFICERS

     SECTION 12.   The Chairman of the Board and the President shall have such
duties as usually pertain to their respective offices, except as otherwise
directed by the Board of Trustees or the Executive Committee, and shall also
have such powers and duties as may from time to time be conferred upon them by
the Board of Trustees or the Executive Committee. The Vice Chairman of the Board
shall have such powers and duties as may from time to time be conferred upon him
by the Board of Trustees, the Executive Committee or the Chairman of the Board.
In the absence or disability of the Chairman of the Board, the Vice Chairman of
the Board shall perform the duties and exercise the powers of the Chairman of
the Board. The Vice Presidents and the other officers of the Company shall have
such duties as usually pertain to their respective offices, except as otherwise
directed by the Board of Trustees, the Executive Committee, the Chairman of the
Board, the Vice Chairman of the Board or the President, and shall also have such
powers and duties as may from time to time be conferred upon them by the Board
of Trustees, the Executive Committee, the Chairman of the Board, the Vice
Chairman of the Board or the President.

APPOINTMENT EXECUTIVE COMMITTEE, EXECUTIVE COMMITTEE QUORUM, COMMITTEE MEETINGS,
PARTICIPATION BY CONFERENCE TELEPHONE, ACTION BY UNANIMOUS WRITTEN CONSENT

     SECTION 13.   The Board of Trustees, as soon as may be after the election
of Trustees in each year, may by a resolution passed by a majority of the whole
Board, appoint an Executive Committee, to consist of the Chairman of the Board
(and in his absence the Vice Chairman of the Board) and three or more additional
Trustees as the Board may from time to time determine, which shall have and may
exercise during the intervals between the meetings of the Board all the powers
vested in the Board except that neither the Executive Committee nor any other
committee appointed pursuant to this section of the By-laws shall have authority
as to any of the following



                                      - 4 -

matters: the submission to stockholders of any action as to which stockholders'
authorization is required by law; the filling of vacancies on the Board or on
any committee thereof; the fixing of compensation of any Trustee for serving on
the Board or on any committee thereof; the amendment or repeal of these By-laws,
or the adoption of new By-laws; and the amendment or repeal of any resolution of
the Board which by its terms shall not be so amendable or repealable. The Board
shall have the power at any time to change the membership of such Executive
Committee and to fill vacancies in it. The Executive Committee may make rules
for the conduct of its business and may appoint such committees and assistants
as it may deem necessary. Four members of said Executive Committee shall
constitute a quorum. The Chairman of the Board or, in his absence a Chairman pro
tern elected by the meeting from among the members of the Executive Committee
present shall preside at all meetings of the Executive Committee. The Board may
designate one or more Trustees as alternate members of any committee appointed
pursuant to this section of the By-laws who may replace any absent member or
members at any meeting of such committee. The Board of Trustees may also from
time to time appoint other committees consisting of three or more Trustees with
such powers as may be granted to them by the Board of Trustees, subject to the
restrictions contained in this section of the By-laws. Any one or more members
of any committee appointed pursuant to this section may participate in any
meeting of such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at such meeting. Any action required or permitted to be taken
by any committee appointed pursuant to this section may be taken without a
meeting if all members of such committee consent in writing to the adoption of a
resolution authorizing the action. Each resolution so adopted and the written
consents thereto by the members of such committee shall be filed with the
minutes of the proceedings of such committee.

DEPOSITORS, SIGNATURES

     SECTION 14.   The Board of Trustees are authorized to select such
depositories as they shall deem proper for the funds of the Company. All checks
and drafts against such deposited funds shall be signed by such person or
persons and in such manner as may be specified by the Board of Trustees.

INDEMNIFICATION OF TRUSTEES AND OFFICERS

     SECTION 15.   The Company shall fully indemnify in all circumstances to the
extent not prohibited by law any person made, or threatened to be made, a party
to an action or proceeding, whether civil or criminal, including an
investigative, administrative or legislative proceeding, and including an
action by or in the right of the Company or any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, by reason of the fact that he, his testator or
intestate, is or was a Trustee or officer of the Company, or is or was serving
at the request of the Company any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, as a director, officer or in any other capacity
against any and all judgments, fines, amounts paid in settlement, and expenses,



                                      - 5 -

including attorneys' fees, actually and reasonably incurred as a result of or in
connection with any such action or proceeding or related appeal; provided,
however, that no indemnification shall be made to or on behalf of any Trustee,
director or officer if a judgment or other final adjudication adverse to the
Trustee, director or officer establishes that his acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action so adjudicated, or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; and,
except in the case of an action or proceeding specifically approved by the Board
of Trustees, the Company shall pay expenses incurred by or on behalf of such a
person in defending such a civil or criminal action or proceeding (including
appeals) in advance of the final disposition of such action or proceeding
promptly upon receipt by the Company, from time to time, of a written demand of
such person for such advancement, together with an undertaking by or on behalf
of such person to repay any expenses so advanced to the extent that the person
receiving the advancement is ultimately found not to be entitled to
indemnification for such expenses; and the right to indemnification and
advancement of defense expenses granted by or pursuant to this by-law (i) shall
not limit or exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, certificate of incorporation, by-law,
resolution or agreement, (ii) shall be deemed to constitute contractual
obligations of the Company to any Trustee, director or officer who serves in
such capacity at any time while this by-law is in effect, (iii) are intended to
be retroactive and shall be available with respect to events occurring prior to
the adoption of this by-law and (iv) shall continue to exist after the repeal or
modification hereof with respect to events occurring prior thereto. It is the
intent of this by-law to require the Company to indemnify the persons referred
to herein for the aforementioned judgments, fines, amounts paid in settlement
and expenses, including attorneys' fees, in each and every circumstance in which
such indemnification could lawfully be permitted by an express provision of a
by-law, and the indemnification required by this by-law shall not be limited by
the absence of an express recital of such circumstances. The Company may, with
the approval of the Board of Trustees, enter into an agreement with any person
who is, or is about to become, a Trustee or officer of the Company, or who is
serving, or is about to serve, at the request of the Company, any other
corporation of any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, as a director,
officer or in any other capacity, which agreement may provide for
indemnification of such person and advancement of defense expenses to such
person upon such terms, and to the extent, as may be permitted by law.

     SECTION 16.   Wherever the expression "Trustees" or "Board of Trustees" is
used in these By-laws the same shall be deemed to apply to the Directors or
Board of Directors, as the case may be, if the designation of those persons
constituting the governing board of this Company is changed from "Trustees" to
"Directors".

AMENDMENT OF BY-LAWS

     SECTION 17.   Either the Board of Trustees or the stockholders may alter or
amend these By-laws at any meeting duly held as above provided, the notice of
which includes notice of the proposed amendment.



                                      - 6 -

                                EMERGENCY BY-LAWS

                                       OF

                  CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

                                   As Amended
                                February 23, 1966

                             Effective May 16, 1966

     SECTION 1.    These Emergency By-laws may be declared effective by the
Defense Council of New York as constituted under the New York State Defense
Emergency Act in the event of attack and shall cease to be effective when the
Council declares the end of the period of attack.

     SECTION 2.    In the event of attack and until the Defense Council declares
the end of the period of attack the affairs of the Company shall be managed by
such Trustees theretofore elected as are available to act, and a majority of
such Trustees shall constitute a quorum. In the event that there are less than
three Trustees available to act, then and in that event the Board of Trustees
shall consist of such Trustees theretofore elected and available to act plus
such number of senior officers of the Company not theretofore elected as
Trustees as will make a Board of not less than three nor more than five members.
The Board as so constituted shall continue until such time as the Defense
Council declares the end of the period of attack and their successors are duly
elected.

     SECTION 3.    The By-laws of the Company shall remain in effect during the
period of emergency to the extent that said By-laws are not inconsistent with
these Emergency By-laws.

                                                                  EXHIBIT 10.1.1

                               Amendment No. 1 to
                     Eugene R. McGrath Employment Agreement

     The EMPLOYMENT AGREEMENT by and between Consolidated Edison, Inc, a New
York Corporation ("CEI"), and Eugene R. McGrath, dated as of September 1, 2000,
is amended effective May 31, 2002, as follows:

     WHEREAS, Eugene R. McGrath (the "Executive") and Consolidated Edison, Inc.
entered into an Employment Agreement effective September 1, 2000 (the
"Agreement");

     WHEREAS, the parties to the Agreement desire to amend the Agreement to
provide for an additional grant of restricted stock units ("Units");

     NOW, THEREFORE, in consideration of the foregoing the parties hereto agree
as follows:

     1. The Agreement is amended to provide for an award (the "Additional
Restricted Stock Unit Award") of additional restricted stock units ("Additional
Units") with respect to 60,000 shares of the Common Shares ($.10 par value) of
CEI ("Stock"), effective as of May 31, 2002.

     2. The Additional Units shall vest in accordance with the following
schedule:



                                             Percentage of Then Outstanding
          Date                                Non Vested Additional Units
          ----                                ---------------------------
                                                     
        08/31/2004                                       50%
        08/31/2005                                      100%


     3. The cash value of a unit shall equal the closing price of a share of
Stock in the Consolidated Reporting System as reported in the Wall Street
Journal or in a similarly readily available public source for the trading day
immediately prior to the applicable transaction date. If no trading of shares of
Stock occurred on such date, the closing price of a share of Stock in such
System as reported for the preceding day on which sales of shares of Stock
occurred shall be used.

     4. (A) Prior to the commencement of the calendar year in which the
Additional Units vest, the Executive may elect: (1) to defer the vesting of all
or a portion of the Additional Units, (2) to have, upon vesting, the cash value
of all or a portion of the Additional Units deferred and invested under the
Company's Deferred Income Plan according to the terms and conditions of the
Deferred Income Plan, or (3) any combination of the above listed options.

        (B) If no election is made, upon vesting, the cash value of the
Additional Units shall be automatically distributed to the Executive.



     5. All other terms and conditions of the initial Units as set forth in
Section 3(d) of the Agreement shall apply to the Additional Units.

     6. In all other respects, the Agreement remains in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officer and its corporate seal to be affixed hereto, and the
Executive has hereto set his hand as of the day and year first set forth above.

                                    CONSOLIDATED EDISON, INC.

                                    By:
                                       ------------------------
                                        Richard A. Voell, Chairman
                                    Executive Personnel and Pension Committee


                                       ------------------------
                                          Eugene R. McGrath

                                                                  EXHIBIT 10.1.2

                               Amendment No. 1 to
                      Joan S. Freilich Employment Agreement

     The EMPLOYMENT AGREEMENT by and between Consolidated Edison, Inc, a New
York Corporation ("CEI"), and Joan S. Freilich, dated as of September 1, 2000,
is amended effective May 31, 2002, as follows:

     WHEREAS, Joan S. Freilich (the "Executive") and Consolidated Edison, Inc.
entered into an Employment Agreement effective September 1, 2000 (the
"Agreement");

     WHEREAS, the parties to the Agreement desire to amend the Agreement to
provide for an additional grant of restricted stock units ("Units");

     NOW, THEREFORE, in consideration of the foregoing the parties hereto agree
as follows:

     1. The Agreement is amended to provide for an award (the "Additional
Restricted Stock Unit Award") of additional restricted stock units ("Additional
Units") with respect to 20,000 shares of the Common Shares ($.10 par value) of
CEI ("Stock"), effective as of May 31, 2002.

     2. The Additional Units shall vest in accordance with the following
schedule:



                                            Percentage of Then Outstanding
              Date                           Non Vested Additional Units
              ----                           ---------------------------
                                                    
           08/31/2004                                   50%
           08/31/2005                                  100%


     3. The cash value of a unit shall equal the closing price of a share of
Stock in the Consolidated Reporting System as reported in the Wall Street
Journal or in a similarly readily available public source for the trading day
immediately prior to the applicable transaction date. If no trading of shares of
Stock occurred on such date, the closing price of a share of Stock in such
System as reported for the preceding day on which sales of shares of Stock
occurred shall be used.

     4. (A) The Executive hereby elects to defer the receipt of any dividend
equivalent cash payments that may become payable to the Executive on the
Additional Units prior to December 31, 2003 and have the cash payment invested
under the Company's Deferred Income Plan according to the terms and conditions
of the Deferred Income Plan.

        (B) Prior to the commencement of a calendar year, beginning with
calendar year 2004, the Executive shall have the right to elect to defer receipt
of any dividend equivalent cash payments that may become payable to the
Executive on the Additional Units in the calendar year



and to have such cash payments invested under the Company's Deferred Income Plan
according to the terms and conditions of the Deferred Income Plan.

     5. (A) Prior to the commencement of the calendar year in which the
Additional Units vest, the Executive may elect: (1) to defer the vesting of all
or a portion of the Additional Units, (2) to have, upon vesting, the cash value
of all or a portion of the Additional Units deferred and invested under the
Company's Deferred Income Plan according to the terms and conditions of the
Deferred Income Plan, or (3) any combination of the above listed options.

        (B) If no election is made, upon vesting, the cash value of the
Additional Units shall be automatically distributed to the Executive.

     6. All other terms and conditions of the initial Units as set forth in
Section 3(d) of the Agreement shall apply to the Additional Units.

     7. In all other respects, the Agreement remains in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officer and its corporate seal to be affixed hereto, and the
Executive has hereto set her hand as of the day and year first set forth above.

                                            CONSOLIDATED EDISON, INC.

                                            By:
                                               ------------------------
                                                Eugene R. McGrath
                               Chairman of the Board and Chief Executive Officer


                                               ------------------------
                                                  Joan S. Freilich

                                                                  EXHIBIT 10.1.3

                               Amendment No. 1 to
                        Kevin Burke Employment Agreement

     The EMPLOYMENT AGREEMENT by and between Consolidated Edison, Inc, a New
York Corporation ("CEI), and Kevin Burke, dated as of September 1, 2000, is
amended effective May 31, 2002, as follows:

     WHEREAS, Kevin Burke (the "Executive") and Consolidated Edison, Inc.
entered into an Employment Agreement effective September 1, 2000 (the
"Agreement");

     WHEREAS, the parties to the Agreement desire to amend the Agreement to
provide for an additional grant of restricted stock units ("Units");

     NOW, THEREFORE, in consideration of the foregoing the parties hereto agree
as follows:

     1. The Agreement is amended to provide for an award (the "Additional
Restricted Stock Unit Award") of additional restricted stock units ("Additional
Units") with respect to 30,000 shares of the Common Shares ($.10 par value) of
CEI ("Stock"), effective as of May 31, 2002.

     2. The Additional Units shall vest in accordance with the following
schedule:



                                              Percentage of Then Outstanding
            Date                               Non Vested Additional Units
            ----                               ---------------------------
                                                    
         08/31/2004                                     50%
         08/31/2005                                    100%


     3. The cash value of a unit shall equal the closing price of a share of
                Stock in the Consolidated Reporting System as reported in the
                Wall Street Journal or in a similarly readily available public
                source for the trading day immediately prior to the applicable
                transaction date. If no trading of shares of Stock occurred on
                such date, the closing price of a share of Stock in such System
                as reported for the preceding day on which sales of shares of
                Stock occurred shall be used.

     4. (A) The Executive hereby elects to defer the receipt of any dividend
                equivalent cash payments that may become payable to the
                Executive on the Additional Units prior to December 31, 2003 and
                have the cash payment invested under the Company's Deferred
                Income Plan according to the terms and conditions of the
                Deferred Income Plan.



        (B) Prior to the commencement of a calendar year, beginning with
calendar year 2004, the Executive shall have the right to elect to defer receipt
of any dividend equivalent cash payments that may become payable to the
Executive on the Additional Units in the calendar year and to have such cash
payments invested under the Company's Deferred Income Plan according to the
terms and conditions of the Deferred Income Plan.

     5. (A) Prior to the commencement of the calendar year in which the
Additional Units vest, the Executive may elect: (1) to defer the vesting of all
or a portion of the Additional Units, (2) to have, upon vesting, the cash value
of all or a portion of the Additional Units deferred and invested under the
Company's Deferred Income Plan according to the terms and conditions of the
Deferred Income Plan, or (3) any combination of the above listed options.

        (B) If no election is made, upon vesting, the cash value of the
Additional Units shall be automatically distributed to the Executive.

     6. All other terms and conditions of the initial Units as set forth in
Section 3(d) of the Agreement shall apply to the Additional Units.

     7. In all other respects, the Agreement remains in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officer and its corporate seal to be affixed hereto, and the
Executive has hereto set his hand as of the day and year first set forth above.

                                        CONSOLIDATED EDISON, INC.

                                        By:
                                           ------------------------
                                            Eugene R. McGrath
                           Chairman of the Board and Chief Executive Officer


                                           ------------------------
                                               Kevin Burke

                                                                  EXHIBIT 10.1.4

                               Amendment No. 1 to
                      John D. McMahon Employment Agreement

     The EMPLOYMENT AGREEMENT by and between Consolidated Edison, Inc, a New
York Corporation ("CEI), and John D. McMahon, dated as of September 1, 2000, is
amended effective May 31, 2002, as follows:

     WHEREAS, John D. McMahon (the "Executive") and Consolidated Edison, Inc.
entered into an Employment Agreement effective September 1, 2000 (the
"Agreement");

     WHEREAS, the parties to the Agreement desire to amend the Agreement to
provide for an additional grant of restricted stock units ("Units");

     NOW, THEREFORE, in consideration of the foregoing the parties hereto agree
as follows:

     1. The Agreement is amended to provide for an award (the "Additional
Restricted Stock Unit Award") of additional restricted stock units ("Additional
Units") with respect to 20,000 shares of the Common Shares ($.10 par value) of
CEI ("Stock"), effective as of May 31, 2002.

     2. The Additional Units shall vest in accordance with the following
schedule:



                                              Percentage of Then Outstanding
          Date                                  Non Vested Additional Units
          ----                                  ---------------------------
                                                        
       08/31/2004                                           50%
       08/31/2005                                          100%


     3. The cash value of a unit shall equal the closing price of a share of
               Stock in the Consolidated Reporting System as reported in the
               Wall Street Journal or in a similarly readily available public
               source for the trading day immediately prior to the applicable
               transaction date. If no trading of shares of Stock occurred on
               such date, the closing price of a share of Stock in such System
               as reported for the preceding day on which sales of shares of
               Stock occurred shall be used.

     4. (A) The Executive hereby elects to defer the receipt of any dividend
               equivalent cash payments that may become payable to the Executive
               on the Additional Units prior to December 31, 2003 and have the
               cash payment invested under the Company's Deferred Income Plan
               according to the terms and conditions of the Deferred Income
               Plan.

        (B) Prior to the commencement of a calendar year, beginning with
calendar year 2004, the Executive shall have the right to elect to defer receipt
of any dividend equivalent cash payments that may become payable to the
Executive on the Additional Units in the calendar year



and to have such cash payments invested under the Company's Deferred Income Plan
according to the terms and conditions of the Deferred Income Plan.

     5. (A) Prior to the commencement of the calendar year in which the
Additional Units vest, the Executive may elect: (1) to defer the vesting of all
or a portion of the Additional Units, (2) to have, upon vesting, the cash value
of all or a portion of the Additional Units deferred and invested under the
Company's Deferred Income Plan according to the terms and conditions of the
Deferred Income Plan, or (3) any combination of the above listed options.

        (B) If no election is made, upon vesting, the cash value of the
Additional Units shall be automatically distributed to the Executive.

     6. All other terms and conditions of the initial Units as set forth in
Section 3(d) of the Agreement shall apply to the Additional Units.

     7. In all other respects, the Agreement remains in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officer and its corporate seal to be affixed hereto, and the
Executive has hereto set his hand as of the day and year first set forth above.

                                    CONSOLIDATED EDISON, INC.

                                    By:
                                        ------------------------
                                         Eugene R. McGrath
                     Chairman of the Board and Chief Executive Officer


                                        ------------------------
                                          John D. McMahon

                                                                  Exhibit 10.1.5

                      RESTRICTED STOCK UNIT AWARD AGREEMENT

          AGREEMENT by and between Consolidated Edison, Inc., a New York
Corporation ("CEI"), and Stephen B. Bram (the "Executive"), dated as of May 31,
2002.

          WHEREAS, the Executive is currently serving as President of Orange and
Rockland Utilities, Inc., a New York corporation and subsidiary of CEI, (CEI and
its subsidiaries and affiliates hereinafter collectively referred to as the
"Company"); and

          WHEREAS, the parties desire to enter into this Agreement providing for
the granting of restricted stock units ("Units") pursuant to the terms and
conditions set forth below.

          NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:

               1. RESTRICTED STOCK UNIT AWARD. In consideration of his continued
employment from the date of this Agreement through August 31, 2005, ("Employment
Period"), the Executive shall be granted an award (the " Restricted Stock Unit
Award") of restricted stock units ("Units") with respect to 20,000 shares of the
Common Shares ($.10 par value) of CEI ("Stock"), effective as of the date of
this Agreement, in accordance with the following terms and conditions:

          (a) Each Unit shall represent the right, upon vesting, to receive the
     cash value of one share of Stock. The cash value of a unit shall equal the
     closing price of a share of Stock in the Consolidated Reporting System as
     reported in the Wall Street Journal or in a similarly readily available
     public source for the trading day immediately prior to the applicable
     transaction date. If no trading of shares of Stock occurred on such date,
     the closing price of a share of Stock in such System as reported for the
     preceding day on which sales of shares of Stock occurred shall be used.

          (b) The Executive's Units shall vest in accordance with the following
     schedule, provided that the Executive has remained continuously employed by
     the Company, or its successor, during the Employment Period through the
     dates indicated below:



                                             Percentage of Then
                                           Outstanding Non Vested
                Date                               Units
                ----                       ----------------------
                                                    
               8/31/2004                                50%

               8/31/2005                               100%




          (c) If, during the Employment Period and prior to a Change in Control,
     the Company terminates the Executive's employment for Cause or without
     Cause or the Executive terminates his employment, the Executive shall
     forfeit all right to Units that are not vested as of the Date of
     Termination. If, during the Employment Period and following a Change in
     Control, the Company shall terminate the Executive's employment without
     Cause or the Executive terminates his employment for Good Reason, the
     Executive's Units shall fully and immediately vest as of the Date of
     Termination. If, during the Employment Period, the Executive's employment
     terminates by reason of death or Disability, the Executive's Units shall
     fully and immediately vest as of the Date of Termination. If, during the
     Employment Period, the Executive retires, unless the Board otherwise
     determines, there shall be no acceleration of vesting of any portion of the
     Restricted Stock Unit Award not yet earned.

          (d) Subject to any election made pursuant to Section 1 (h), once Units
     shall vest, CEI shall promptly pay the Executive the cash value of the
     shares of Stock represented by the Units. Prior to vesting, the Units shall
     represent an unfunded and unsecured promise to pay the Executive the cash
     value of shares of Stock upon vesting thereof.

          (e) Units may not be sold, assigned, transferred, pledged,
     hypothecated or otherwise disposed of, except by will or the laws of
     descent and distribution. Any attempted sale, assignment, transfer, pledge,
     hypothecation or disposition in contravention of the foregoing shall be
     null and void and of no effect.

          (f)     (i) Except as otherwise provided herein, the Executive shall
                  have no rights of a stockholder with respect to the shares of
                  Stock represented by Units, including no right to vote the
                  shares, to receive dividends and other distributions thereon
                  and to participate in any change in capitalization of CEI.

                  (ii) In the event of any change in capitalization resulting in
                  the issuance of additional shares to CEI's stockholders, the
                  shares of Stock represented by his Units shall be equitably
                  adjusted as determined in good faith by the CEI's Executive
                  Pension and Personnel Committee.

                  (iii) Prior to the delivery of the cash value of the shares of
                  Stock upon vesting of Units, at the time of each distribution
                  of any regular cash dividend paid by CEI in respect of Stock,
                  the Executive shall be entitled to receive a cash payment from
                  the Company equal to the aggregate regular cash dividend
                  payment that would have been made in respect of the shares of
                  Stock represented by Units which have not yet vested, as if
                  the shares represented by such Units had been actually
                  delivered to the Executive, provided, that no such payment in
                  respect of shares of Stock represented by Units shall be made
                  if, prior to the time such payment is due, the

                                        2


                  Executive's rights with respect to such Units have previously
                  terminated under this Agreement.

                  (iv) In the event of a dividend payable in shares of Stock
                  instead of cash, the Executive shall be entitled to receive on
                  the distribution date additional Units in such number that
                  would have been received in respect of the shares of Stock
                  represented by Units that have not yet vested, as if the
                  shares represented by such Units had actually been delivered
                  to the Executive.

                  (v) The Executive hereby elects to defer the receipt of any
                  dividend equivalent cash payments that may become payable to
                  the Executive prior to December 31, 2003 and have the cash
                  payment invested under the Company's Deferred Income Plan
                  according to the terms and conditions of the Deferred Income
                  Plan.

                  (vi) Prior to the commencement of a calendar year, beginning
                  with calendar year 2004, the Executive shall have the right to
                  elect to defer receipt of any dividend equivalent cash
                  payments that may become payable to the Executive in the
                  calendar year and to have such cash payments invested under
                  the Company's Deferred Income Plan according to the terms and
                  conditions of the Deferred Income Plan.

          (g) CEI's Executive Pension and Personnel Committee may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of any taxes that the Company is required by law or regulation of
any governmental authority, whether federal, state or local, domestic or
foreign, to withhold in connection with the Restricted Stock Unit Award,
including, but not limited to (1) withholding the amount due from the
distribution of the cash value of the Units, or (2) withholding the amount due
from the Executive's other compensation.

          (h) Prior to the commencement of the calendar year in which the Units
vest, the Executive may elect: (1) to defer the vesting of all or a portion of
the Units, (2) to have, upon vesting, the cash value of all or a portion of the
Units deferred and invested under the Company's Deferred Income Plan according
to the terms and conditions of the Deferred Income Plan, or (3) any combination
of the above listed options. If no such election is made, upon vesting the
Executive will automatically receive a distribution of the cash value of the
shares of Stock represented by the Units as set forth above in Section 1. (d).

          (i) It is agreed that the Restricted Stock Unit Award (including the
grant of Units and any dividend equivalents or other distributions in respect of
the Units) shall not be included in the Executive's pension calculation.

                                        3


               2. CHANGE IN CONTROL.

                  Upon the occurrence of a Change in Control during the
Employment Period, the Restricted Stock Unit Award shall continue in effect and
vest (or be forfeited) in accordance with provisions of this Agreement as though
no Change in Control had occurred, except that, as appropriate, the shares of
Stock represented by the Restricted Stock Unit Award shall be treated the same
as all other shares of Stock of CEI in any transaction constituting a Change in
Control. The Executive's rights upon a termination of employment by the Company
without Cause, by reason of death or Disability or by the Executive for Good
Reason, which termination occurs following a Change in Control, shall be as
specified above in Section 1.(c).

               3. DEFINITIONS. For purposes of this Agreement the following
               definitions apply:

               (a) "Cause" shall mean:

               (i) willful and continued failure by the Executive to
               substantially perform his duties  or

               (ii) the conviction of the Executive of a felony or the entering
               by the Executive of a plea of nolo contendere to a felony, in
               either case having a significant adverse effect on the business
               and affairs of the Company. No act or failure to act on the part
               of the Executive shall be considered "willful" unless it is done,
               or omitted to be done, by the Executive in bad faith or without
               reasonable belief that the Executive's action or omission was in
               the best interests of the Company. Any act or failure to act that
               is based upon authority given pursuant to a resolution duly
               adopted by the Board, or the advice of counsel for the Company,
               shall be conclusively presumed to be done, or omitted to be done,
               by the Executive in good faith and in the best interests of the
               Company. The Company expressly acknowledges that Cause will not
               exist merely because of a failure of the Company or its
               affiliates to meet budgeted results.

               (iii) A termination of the Executive's employment for Cause shall
               be effected in accordance with the following procedures. The
               Company shall give the Executive written notice ("Notice of
               Termination for Cause") of its intention to terminate the
               Executive's employment for Cause, setting forth in reasonable
               detail the specific conduct of the Executive that it considers to
               constitute Cause and the specific provision(s) of this Agreement
               on which it relies. Such notice shall be given no later than 60
               days after the act or failure (or the last in a series of acts or
               failures) that the Company alleges to constitute Cause. The
               Executive shall have 30 days after receiving the Notice of
               Termination for Cause in which to cure such act or failure, to
               the extent such cure is possible. If the Executive fails to cure
               such act or failure to the reasonable satisfaction of the Board,
               the Company shall give the Executive a second written notice
               stating the date, time and place of a

                                        4


               special meeting of the Board called and held specifically for the
               purpose of considering the Executive's termination for Cause,
               which special meeting shall take place not less than ten and not
               more than twenty business days after the Executive receives
               notice thereof. The Executive shall be given an opportunity,
               together with counsel, to be heard at the special meeting of the
               Board. The Executive's termination for Cause shall be effective
               when and if a resolution is duly adopted at such special meeting
               by the affirmative vote of a majority of the Board stating that
               in the good faith opinion of the Board, the Executive is guilty
               of the conduct described in the Notice of Termination for Cause
               and that such conduct constitutes Cause under this Agreement.

               (b) "Change in Control" shall mean the occurrence of any of the
following events after the date of this Agreement:

               (i) any "person" (within the meaning of Section 13(d) of the
               Securities Exchange Act of 1934, as amended (the "Exchange Act")
               is or becomes the beneficial owner within the meaning of Rule
               13d-3 under the Exchange Act (a "Beneficial Owner"), directly or
               indirectly, of securities of CEI (not including in the securities
               beneficially owned by such person any securities acquired
               directly from CEI or its affiliates) representing 20% or more of
               the combined voting power of CEI's then outstanding securities,
               excluding any person who becomes such a Beneficial Owner in
               connection with a transaction described in clause (A) of
               paragraph (iii) below; or

               (ii) the following individuals cease for any reason to constitute
               a majority of the number of directors of CEI then serving:
               individuals who, on the date of this Agreement, constitute the
               Board and any new director (other than a director whose initial
               assumption of office is in connection with an actual or
               threatened election contest, including but not limited to a
               consent solicitation, relating to the election of directors of
               CEI) whose appointment or election by the Board or nomination for
               election by CEI's stockholders was approved or recommended by a
               vote of at least two-thirds (2/3) of the directors then still in
               office who either were directors on the date hereof or whose
               appointment, election or nomination for election was previously
               so approved or recommended; or

               (iii) the shareholders of CEI approve or there is consummated a
               merger or consolidation of CEI or any direct or indirect
               wholly-owned subsidiary of CEI with any other corporation, other
               than (A) a merger or consolidation which would result in the
               voting securities of CEI outstanding immediately prior to such
               merger or consolidation continuing to represent (either by
               remaining outstanding or by being converted into voting
               securities of the surviving entity or any parent thereof), in
               combination with the ownership of any trustee or other fiduciary
               holding securities under an employee benefit plan of CEI or any
               subsidiary of CEI, at least 65% of the combined voting power of
               the securities of CEI or such surviving entity or any parent
               thereof outstanding immediately after such merger or
               consolidation, or (B) a merger or consolidation effected to
               implement a

                                        5


               recapitalization of CEI (or similar transaction) in which no
               person is or becomes the Beneficial Owner, directly or
               indirectly, of securities of CEI representing 20% or more of the
               combined voting power of CEI's then outstanding securities; or

               (iv) the shareholders of CEI approve a plan of complete
               liquidation or dissolution of CEI or there is consummated an
               agreement for the sale or disposition by CEI of all or
               substantially all of CEI's assets, other than a sale or
               disposition by CEI of all or substantially all of CEI's assets to
               an entity, at least 75% of the combined voting power of the
               voting securities of which are owned by stockholders of CEI in
               substantially the same proportions as their ownership of CEI
               immediately prior to such sale.

               (v) Notwithstanding the foregoing, a "Change in Control" shall
               not be deemed to have occurred by virtue of the consummation of
               any transaction or series of integrated transactions immediately
               following which the record holders of the common stock of CEI
               immediately prior to such transaction or series of transactions
               continue to have substantially the same proportionate ownership
               in an entity which owns all or substantially all of the assets of
               CEI immediately following such transaction or series of
               transactions.

               (c)  "Date of Termination" means the date of the Executive's
death, the Disability Effective Date, the date on which the termination of the
Executive's employment by the Company for Cause or without Cause or by the
Executive for Good Reason is effective, or the effective date specified in a
notice of a termination of employment without Good Reason from the Executive to
the Company, or the effective date of the Executive's retirement, as the case
may be.

               (d)  "Disability" means that: (i) the Executive has been unable,
for the period, if any, specified in the Company's disability plan for senior
executives, but not less than a period of 180 consecutive days, to perform the
Executive's duties, and (ii) a physician selected by the Company or its
insurers, and acceptable to the Executive or the Executive's legal
representative, has determined that the Executive is disabled within the meaning
of the applicable disability plan for senior executives. If the Company
determines in good faith that the Disability of the Executive has occurred
during the Employment Period (pursuant to the definition of Disability set forth
above), it may give to the Executive written notice of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties.

                                        6


               (e)  "Good Reason" following a Change in Control shall mean:

               (i) any adverse change in the Executive's titles, authority,
               duties, responsibilities and reporting lines as in effect
               immediately prior to a Change in Control, or the assignment to
               the Executive of any duties or responsibilities inconsistent in
               any respect with those customarily associated with the
               position(s) held by the Executive immediately prior to a Change
               in Control;

               (ii) the appointment of any person other than the Executive to
               the position held by the Executive immediately prior to a Change
               in Control or any other position or title conferring similar
               status or authority;

               (iii) any reduction in the Executive's salary, target annual
               bonus, target long-term incentive or Retirement benefit as in
               effect immediately prior to a Change in Control;

               (iv) any requirement by the Company that the Executive's services
               be rendered primarily at an office or location that is more than
               50 miles from the Executive's employment office or location
               immediately prior to a Change in Control;

               (v) any purported termination of the Executive's employment by
               the Company for a reason or in a manner not expressly permitted
               by this Agreement;

               (vi) any failure by CEI to comply with Section 5(c) of this
               Agreement;

               (vii) any other material breach of this Agreement by the Company
               that either is not taken in good faith or, even if taken in good
               faith, is not remedied by the Company promptly after receipt of
               notice thereof from the Executive;

               (viii) Following a Change in Control, the Executive's
               determination that an act or failure to act constitutes Good
               Reason shall be conclusively presumed to be valid unless such
               determination is decided to be unreasonable by an arbitrator
               pursuant to Section 4; or

               (ix) A termination of employment by the Executive for Good Reason
               shall be effectuated by giving the Company written notice
               ("Notice of Termination for Good Reason") of the termination,
               setting forth in reasonable detail the specific acts or omissions
               of the Company that constitute Good Reason and the specific
               provision(s) of this Agreement on which the Executive relies.
               Unless the Board determines otherwise, a Notice of Termination
               for Good Reason by the Executive

                                        7


               act or omission (or the last in a series of acts or omissions)
               that the Executive alleges to constitute Good Reason, and the
               Company shall have 30 days from the receipt of such Notice of
               Termination for Good Reason to cure the conduct cited therein. A
               termination of employment by the Executive for Good Reason shall
               be effective on the final day of such 30-day cure period unless
               prior to such time the Company has cured the specific conduct
               asserted by the Executive to constitute Good Reason to the
               reasonable satisfaction of the Executive (unless the notice sets
               forth a later date (which date shall in no event be later than 30
               days after the notice is given) as of which such termination
               shall be effective).

               (x) A termination of the Executive's employment by the Executive
               without Good Reason shall be effected by giving the Company
               written notice specifying the effective date of termination.

               4. DISPUTES.

                  Any dispute about the validity, interpretation, effect or
alleged violation of this Agreement shall be resolved by confidential binding
arbitration to be held in New York, New York, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereover. All costs and expenses incurred by the Company or the
Executive or the Executive's beneficiaries in connection with any such
controversy or dispute, including without limitation reasonable attorney's fees,
shall be borne by the Company as incurred, except that the Executive shall be
responsible for any such costs and expenses incurred in connection with any
claim determined by the arbitrator(s) to have been without reasonable basis or
to have been brought in bad faith. The Executive shall be entitled to interest
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code, on any delayed payment which the arbitrator(s) determine he was entitled
to under this Agreement.

               5. SUCCESSORS.

                  (a) NO ASSIGNMENT BY EXECUTIVE. This Agreement is personal to
the Executive and without the prior written consent of CEI shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be binding upon
and enforceable by the Executive's legal representatives.

                  (b) SUCCESSORS TO CEI. This Agreement shall inure to the
benefit of and be binding upon and enforceable by CEI and its successors and
assigns.

                  (c) PERFORMANCE BY A SUCCESSOR TO CEI. CEI will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of CEI to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that CEI would be required to perform it if no such succession
had taken place. As used in this Agreement, "CEI" shall mean

                                        8


CEI as hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

               6. MISCELLANEOUS.

                  (a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements executed and performed entirely therein. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect.

                  (b) NOTICES. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                  If to the Executive:      One Blue Hill Plaza
                                            Pearl River, NY 10965


                  If to the Company:        4 Irving Place
                                            New York, NY 10003,
                                            Attention:  General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                  (c) INVALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.

                  (d) TAX WITHHOLDING. Notwithstanding any other provision of
this Agreement, the Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

                  (e) FAILURE TO ASSERT RIGHTS. The Executive's or the Company's
failure to insist upon strict compliance with any provisions of, or to assert
any right under, this Agreement shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this Agreement.

                  (f) NO ALIENATION. The rights and benefits of the Executive
under this Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process
except as required by law. Any attempt by the

                                        9


Executive to anticipate, alienate, assign, sell, transfer, pledge, encumber or
charge the same shall be void. Payments hereunder shall not be considered assets
of the Executive in the event of insolvency or bankruptcy.

                  (g) ENTIRE AGREEMENT. This Agreement represents the complete
agreement between the Executive and the Company relating to the granting of
restricted stock units and may not be altered or changed except by written
agreement executed by the parties hereto or their respective successors or legal
representatives. This Agreement supersedes all prior agreements and other
understandings between the parties with respect to the subject matter herein
except for the portions thereof, which have been incorporated by reference in
this Agreement.

               IN WITNESS WHEREOF, the Executive and, pursuant to due
authorization from its Board of Directors, the Company have caused this
Agreement to be executed as of the day and year first above written.


                              CONSOLIDATED EDISON, INC.


                              By:
                                 -------------------------------------
                                            Eugene R. McGrath
                              Chairman of the Board and Chief Executive Officer


                                 -------------------------------------
                                            Stephen B. Bram

                                       10

                                                                  Exhibit 10.1.6


                            Consolidated Edison, Inc.

           Deferred Stock Compensation Plan For Non-Officer Directors

At its meeting on June 20, 2002, the Board of Directors of Consolidated Edison,
Inc. ("CEI") adopted the Consolidated Edison, Inc. Deferred Stock Compensation
Plan for Non-Officer Directors (the "Plan") and terminated the Consolidated
Edison Company of New York, Inc. Retirement Plan for Trustees (the "Retirement
Plan") and the Consolidated Edison, Inc. Restricted Stock Plan for Non-Employee
Directors. Retired Directors receiving benefits under the Retirement Plan will
continue to do so. The following is an outline of the Plan, which is expected to
be formalized in a Plan document that when completed will be filed as an exhibit
to a future periodic report.

         o        Directors of CEI who are not officers or employees of CEI are
                  eligible to participate in the plan.

         o        As of July 1, 2002, the net present value of each current
                  eligible Director's accrued benefit under the Retirement Plan
                  was converted into a number of Company stock units, which was
                  calculated by dividing the net present value of the Retirement
                  Plan benefit by the closing price of a share of CEI's common
                  stock on June 28, 2002, the last business day before July 1.
                  In addition, each eligible Director was allocated an
                  additional 400 stock units as of July 1, 2002.

         o        Commencing in 2003, each eligible Director will be allocated
                  an annual award of 1,300 stock units on the first business day
                  after the Company's annual meeting. If an eligible Director is
                  first appointed to the Board after an annual meeting, his or
                  her first annual award will be prorated.

         o        The initial allocations and the annual awards of stock units
                  will be deferred until the Director's termination of service
                  from the Board of Directors.

         o        Directors will have the right to defer all or a portion of
                  their retainers and meeting fees into additional stock units.
                  Stock units attributable to voluntary deferrals of retainers
                  and meeting fees will be deferred until the Director's
                  termination of service or, at the option of the Director, for
                  five years or more after the year in which the units were
                  deferred, if earlier.

         o        Dividend equivalents will be payable on deferred stock units
                  in the amount and at the time that dividends are paid on CEI's
                  common stock. At the option of a Director they will either be
                  paid in cash or invested in additional stock units.

         o        All payments on account of stock units will be made in shares
                  of CEI common stock except that fractional stock units will be
                  paid in cash. The Directors will have the option to have the
                  stock units resulting from the mandatory deferrals paid over a
                  maximum of ten years.

                                                                    Exhibit 10.2

                             THE CONSOLIDATED EDISON

                              THRIFT SAVINGS PLAN*


                         EFFECTIVE AS OF JANUARY 1, 2001
                            AMENDED AS OF MAY 8, 2002
                              FOR INCLUSION OF THE
                          EMPLOYEE STOCK OWNERSHIP PLAN


                                    *INCLUDES
                    THE CONSOLIDATED EDISON OF NEW YORK, INC.
                     TAX REDUCTION ACT STOCK OWNERSHIP PLAN



                                TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                                ----
                                                                                                              
ARTICLE I DEFINITIONS.............................................................................................5

         1.01     ACCOUNT BALANCE.................................................................................5
         1.02     ACTUAL DEFERRAL PERCENTAGE......................................................................5
         1.03     AFFILIATE.......................................................................................6
         1.04     AFTER-TAX CONTRIBUTION..........................................................................6
         1.05     AFTER-TAX CONTRIBUTIONS SUBACCOUNT..............................................................7
         1.06     ANNUAL DOLLAR LIMIT.............................................................................7
         1.07     ANNUITY STARTING DATE...........................................................................7
         1.08     AVERAGE CONTRIBUTION PERCENTAGE.................................................................7
         1.09     AVERAGE ACTUAL DEFERRAL PERCENTAGE..............................................................7
         1.10     BENEFICIARY.....................................................................................8
         1.11     BOARD...........................................................................................8
         1.12     BREAK IN SERVICE................................................................................8
         1.13     CECONY..........................................................................................8
         1.14     CECONY MANAGEMENT EMPLOYEE......................................................................8
         1.15     CECONY MANAGEMENT PARTICIPANT...................................................................8
         1.16     CECONY MANAGEMENT PLAN..........................................................................8
         1.17     CECONY PARTICIPANT..............................................................................9
         1.18     CECONY WEEKLY EMPLOYEE..........................................................................9
         1.19     CECONY WEEKLY PARTICIPANT.......................................................................9
         1.20     CECONY WEEKLY PLAN..............................................................................9
         1.21     CEI.............................................................................................9
         1.22     CEI AFFILIATE OR CEI AFFILIATES.................................................................9
         1.23     CEI EMPLOYEE....................................................................................9
         1.24     CEI PARTICIPANT.................................................................................9
         1.25     CODE............................................................................................9
         1.26     COMPANY........................................................................................10
         1.27     COMPANY STOCK FUND.............................................................................10
         1.28     COMPENSATION...................................................................................10
         1.29     CONTRIBUTION PERCENTAGE........................................................................11
         1.30     COST-OF-LIVING ADJUSTMENT......................................................................12
         1.31     DISABILITY.....................................................................................12
         1.32     EARNINGS.......................................................................................12
         1.33     ELIGIBLE EMPLOYEE..............................................................................12
         1.34     EMPLOYEE.......................................................................................12
         1.35     EMPLOYER.......................................................................................13
         1.36     EMPLOYER CONTRIBUTION..........................................................................13
         1.37     EMPLOYER CONTRIBUTIONS SUBACCOUNT..............................................................13
         1.38     ERISA..........................................................................................13
         1.39     ESOP...........................................................................................13
         1.40     ESOP EFFECTIVE DATE............................................................................13
         1.41     ESOP TRUST FUND................................................................................13


                                                                             (i)



                                                                                                              
         1.42     EXCESS AGGREGATE CONTRIBUTIONS.................................................................13
         1.43     EXCESS CONTRIBUTIONS...........................................................................14
         1.44     EXCESS DEFERRAL PERCENTAGE.....................................................................14
         1.45     EXCESS PRE-TAX CONTRIBUTIONS...................................................................15
         1.46     HIGHLY COMPENSATED EMPLOYEE....................................................................15
         1.47     HOUR OF SERVICE................................................................................15
         1.48     INVESTMENT FUND................................................................................16
         1.49     INVESTMENT MANAGER.............................................................................17
         1.50     LEASED EMPLOYEE................................................................................17
         1.51     LOAN RESERVE...................................................................................17
         1.52     LOCAL 1-2 EMPLOYEE.............................................................................17
         1.53     LOCAL 3 EMPLOYEE...............................................................................17
         1.54     NAMED FIDUCIARIES..............................................................................17
         1.55     NON-HIGHLY COMPENSATED MANAGEMENT EMPLOYEE.....................................................17
         1.56     NON-PARTICIPATING CONTRIBUTION.................................................................17
         1.57     O&R............................................................................................17
         1.58     O&R EMPLOYEE...................................................................................18
         1.59     O&R HOURLY EMPLOYEE............................................................................18
         1.60     O&R HOURLY PLAN................................................................................18
         1.61     O&R MANAGEMENT EMPLOYEE........................................................................18
         1.62     O&R MANAGEMENT PLAN............................................................................18
         1.63     O&R PARTICIPANT................................................................................18
         1.64     PARTICIPANT....................................................................................18
         1.65     PARTICIPATING CONTRIBUTION.....................................................................18
         1.66     PAYROLL PERIOD.................................................................................18
         1.67     PLAN...........................................................................................19
         1.68     PLAN ADMINISTRATOR.............................................................................19
         1.69     PLAN YEAR......................................................................................19
         1.70     PRE-TAX CONTRIBUTION...........................................................................19
         1.71     PRE-TAX CONTRIBUTIONS SUBACCOUNT...............................................................19
         1.72     PRIOR PLAN OR PRIOR PLANS......................................................................20
         1.73     RECORD KEEPER..................................................................................20
         1.74     RETIREMENT.....................................................................................20
         1.75     ROLLOVER CONTRIBUTIONS.........................................................................20
         1.76     ROLLOVER CONTRIBUTIONS SUBACCOUNT..............................................................20
         1.77     SECTION 125 CONTRIBUTIONS......................................................................20
         1.78     SECTION 132 CONTRIBUTIONS......................................................................21
         1.79     SHARES.........................................................................................21
         1.80     STATUTORY COMPENSATION.........................................................................21
         1.81     TOP HEAVY GROUP................................................................................21
         1.82     TOP-HEAVY PLAN.................................................................................22
         1.83     TRANSFERRED EMPLOYER AND EMPLOYEE PAYSOP CONTRIBUTIONS.........................................22
         1.84     TRASOP.........................................................................................22
         1.85     TRASOP ACCOUNT.................................................................................22
         1.86     TRASOP TRUST FUND..............................................................................22
         1.87     TRUST FUND.....................................................................................22


                                                                              ii



                                                                                                              
         1.88     TRUSTEE........................................................................................22
         1.89     VESTED PORTION.................................................................................22
         1.90     YEAR OF SERVICE................................................................................23

ARTICLE II ELIGIBILITY AND PARTICIPATION.........................................................................24

         2.01     ELIGIBILITY....................................................................................24
         2.02     PARTICIPATION..................................................................................24
         2.03     REEMPLOYMENT OF FORMER EMPLOYEES AND FORMER PARTICIPANTS.......................................26
         2.04     TRANSFERRED PARTICIPANTS.......................................................................26
         2.05     TERMINATION OF PARTICIPATION...................................................................26
         2.06     PARTICIPATION IN ESOP..........................................................................26

ARTICLE III CONTRIBUTIONS........................................................................................27

         3.01     CONTRIBUTION ELECTION..........................................................................27
         3.02     PRE-TAX CONTRIBUTION DOLLAR LIMITATION AND RE-CHARACTERIZATION.................................29
         3.03     RETURN OF EXCESS PRE-TAX CONTRIBUTIONS.........................................................30
         3.04     EXCESS DEFERRALS TO OTHER PLANS................................................................30
         3.05     PARTICIPATING CONTRIBUTIONS ELIGIBLE FOR EMPLOYER CONTRIBUTIONS................................31
         3.06     ROLLOVER CONTRIBUTIONS.........................................................................35
         3.07     CHANGES IN CONTRIBUTIONS.......................................................................36
         3.08     PAYMENT TO TRUST...............................................................................37
         3.09     NO CONTRIBUTIONS TO TRASOP.....................................................................37
         3.10     CATCH-UP CONTRIBUTIONS.........................................................................37
         3.11     EMPLOYER CONTRIBUTIONS TO ESOP.................................................................38

ARTICLE IV INVESTMENT ELECTIONS - TIMING AND FREQUENCY...........................................................39

         4.01     EMPLOYER CONTRIBUTIONS ELECTION................................................................39
         4.02     PARTICIPANT PRE-TAX CONTRIBUTIONS, AFTER-TAX CONTRIBUTIONS AND ROLLOVER CONTRIBUTIONS..........39
         4.03     CHANGE OF ELECTION.............................................................................39
         4.04     CERTIFICATION TO COMPANY.......................................................................40
         4.05     FORFEITURES....................................................................................40

ARTICLE V THE TRUST FUND - INVESTMENTS...........................................................................41

         5.01     TRUST AGREEMENT................................................................................41
         5.02     INVESTMENT OF TRUST FUND.......................................................................41
         5.03     COMPANY STOCK FUND.............................................................................42
         5.04     ACCOUNTS AND SUBACCOUNTS.......................................................................44
         5.05     STATEMENTS OF ACCOUNT..........................................................................44
         5.06     RESPONSIBILITY FOR INVESTMENT..................................................................45

ARTICLE VI VESTING...............................................................................................46

         6.01     PARTICIPANT CONTRIBUTIONS......................................................................46
         6.02     EMPLOYER CONTRIBUTIONS.........................................................................46
         6.03     SPECIAL VESTING RULES..........................................................................47


                                                                             iii



                                                                                                              
ARTICLE VII DISTRIBUTIONS, WITHDRAWALS AND FORFEITURES...........................................................49

         7.01     VOLUNTARY TERMINATION OR TERMINATION BY THE COMPANY - FORFEITURES..............................49
         7.02     DEATH..........................................................................................50
         7.03     WITHDRAWALS....................................................................................50
         7.04     HARDSHIP WITHDRAWALS...........................................................................56
         7.05     DISTRIBUTION FROM COMPANY STOCK FUND...........................................................59
         7.06     LEAVES OF ABSENCE..............................................................................59
         7.07     AGE 70 1/2 REQUIRED DISTRIBUTION...............................................................60
         7.08     FORM AND TIMING OF DISTRIBUTIONS...............................................................61
         7.09     PROOF OF DEATH AND RIGHT OF BENEFICIARY OR OTHER PERSON........................................63
         7.10     DISTRIBUTION LIMITATION........................................................................63
         7.11     DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS.......................................................63

ARTICLE VIII NON-DISCRIMINATION AND LIMITATION...................................................................66

         8.01     ACTUAL DEFERRAL PERCENTAGE TEST................................................................66
         8.02     ACTUAL CONTRIBUTION PERCENTAGE TEST............................................................68
         8.03     SEPARATE NON-DISCRIMINATION TESTING............................................................70
         8.04     MAXIMUM ANNUAL ADDITIONS.......................................................................70

ARTICLE IX LOANS.................................................................................................74

         9.01     LOANS PERMITTED................................................................................74
         9.02     AMOUNT OF LOANS................................................................................74
         9.03     SOURCE OF LOANS................................................................................74
         9.04     INTEREST RATE..................................................................................75
         9.05     REPAYMENT......................................................................................76
         9.06     MULTIPLE LOANS.................................................................................77
         9.07     PLEDGE.........................................................................................77
         9.08     LOAN RESERVE...................................................................................78
         9.09     MINIMUM ACCOUNT BALANCE........................................................................78
         9.10     OTHER TERMS....................................................................................78

ARTICLE X ADMINISTRATION OF THE PLAN, ESOP AND TRASOP............................................................79

         10.01    NAMED FIDUCIARIES AND PLAN ADMINISTRATOR OF PLAN ESOP AND TRASOP...............................79
         10.02    AUTHORITY OF PLAN ADMINISTRATOR................................................................79
         10.03    RELIANCE ON REPORTS............................................................................80
         10.04    DELEGATION OF AUTHORITY........................................................................80
         10.05    ADMINISTRATION EXPENSES........................................................................81
         10.06    FIDUCIARY INSURANCE............................................................................82
         10.07    CLAIM REVIEW...................................................................................82
         10.08    APPOINTMENT OF TRUSTEE.........................................................................83
         10.09    LIMITATION OF LIABILITY........................................................................83

ARTICLE XI MISCELLANEOUS.........................................................................................85

         11.01    EXCLUSIVE BENEFIT - AMENDMENTS.................................................................85
         11.02    TERMINATION - SALE OF ASSETS OF SUBSIDIARY.....................................................85
         11.03    BENEFICIARIES..................................................................................87


                                                                              iv



                                                                                                              
         11.04    ASSIGNMENT OF BENEFITS.........................................................................88
         11.05    MERGER.........................................................................................90
         11.06    CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN..................................................90
         11.07    FACILITY OF PAYMENT............................................................................90
         11.08    INFORMATION....................................................................................91
         11.09    ADDITIONAL PARTICIPATING EMPLOYERS.............................................................91
         11.10    IRS DETERMINATION..............................................................................92
         11.11    MISTAKEN CONTRIBUTIONS.........................................................................93
         11.12    PREVENTION OF ESCHEAT..........................................................................93
         11.13    CONSTRUCTION...................................................................................93

ARTICLE XII TOP-HEAVY PROVISIONS.................................................................................95

         12.01    APPLICATION OF TOP-HEAVY PROVISIONS............................................................95
         12.02    MINIMUM BENEFIT FOR TOP-HEAVY YEAR.............................................................95
         12.03    MINIMUM BENEFITS...............................................................................96
         12.04    AGGREGATION GROUPS.............................................................................96
         12.05    SPECIAL BENEFIT LIMITS.........................................................................97
         12.06    SPECIAL DISTRIBUTION RULE......................................................................97

ARTICLE XIII TAX REDUCTION ACT STOCK OWNERSHIP PLAN..............................................................98

         13.01    PURPOSE - SEPARATE ENTITY......................................................................98
         13.02    TRASOP ACCOUNTS - APPLICATION OF DIVIDENDS.....................................................99
         13.03    VOTING RIGHTS, OPTIONS, RIGHTS, AND WARRANTS..................................................100
         13.04    DISTRIBUTION OF SHARES........................................................................101
         13.00    DIVERSIFICATION OF TRASOP ACCOUNTS............................................................106

ARTICLE XIV EMPLOYEE STOCK OWNERSHIP PLAN.......................................................................109

         14.01    PURPOSE - SEPARATE ENTITY.....................................................................109
         14.02    SPECIAL DEFINITIONS FOR ESOP..................................................................110
         14.03    PARTICIPATION IN ESOP.........................................................................111
         14.04    EMPLOYER CONTRIBUTIONS........................................................................111
         14.05    PURCHASE OF SHARES............................................................................112
         14.06    DIVIDENDS.....................................................................................113
         14.07    VOTING RIGHTS, OPTIONS, RIGHTS, AND WARRANTS..................................................114
         14.08    TRANSFERABILITY...............................................................................115
         14.09    DIVERSIFICATION...............................................................................115
         14.10    DISTRIBUTION OF SHARES........................................................................116


                                                                               v


                   THE CONSOLIDATED EDISON THRIFT SAVINGS PLAN

                                  INTRODUCTION

     The purpose of the Consolidated Edison Thrift Savings Plan (the "Plan") is
to establish a convenient way for each eligible employee of the parent company,
Consolidated Edison, Inc. (the "Company" and/or "CEI") and of certain of the
controlled group affiliates of CEI, to supplement his or her retirement income
by saving on a regular and long-term basis, while concurrently offering each
employee an additional incentive to continue his or her career with the Company.
The Plan is intended to satisfy the requirements of the Internal Revenue Code of
1986, as amended (the "Code"), Sections 401(k) and 401(m) and to qualify under
Section 401(a). The trust established under and as a part of the Plan is
intended to qualify under Code Section 501(a). The Plan and its trust provide
each Participant with an opportunity to defer a portion of his or her
compensation and to invest and reinvest that deferred savings under the Plan on
a tax-deferred basis. It is intended that a Participant's Pre-Tax contributions,
as defined in the Plan, shall constitute payments by each Employer as
contributions to the trust fund on behalf of the Participant, within the meaning
of Code Section 401(k).

     The Plan was originally established and made effective on January 1, 1987,
by the Consolidated Edison Company of New York, Inc. ("CECONY") as the
Consolidated Edison Retirement Income Savings Plan for Weekly Employees ("CECONY
Weekly Plan"). Thereafter, the CECONY Weekly Plan was amended from time to time.
On December 1, 1996, the CECONY Weekly Plan was amended and restated in its
entirety, among other

                                                                               1


reasons, to make a transition from Bankers Trust Company as trustee and record
keeper to Vanguard Fiduciary Trust Company.

     Effective January 1, 1998, CEI was formed and CECONY became a subsidiary
corporation of CEI. From time to time thereafter, wholly-owned affiliates of CEI
were formed and together with CEI create a controlled group, as defined in Code
Section 414(b), in which CEI is the parent corporation. In July 1999, CEI
acquired Orange and Rockland Utilities, Inc. ("O&R").

     On July 20, 2000, for administrative ease, to facilitate the transfer of
employees from one affiliate to another, and to reduce the cost of operational
expenses, the Board of Trustees of CECONY and the Board of Directors of O&R
approved the merger ("Merger"), effective January 1, 2001, of the following
plans into the CECONY Weekly Plan:

             (i)     the Consolidated Edison Thrift Savings Plan for Management
                     Employees (the "CECONY Management Plan");

             (ii)    the Orange and Rockland Utilities, Inc. Management
                     Employees Savings Plan (the "O&R Management Plan") and

             (iii)   the Orange and Rockland Utilities, Inc. Hourly Group
                     Savings Plan (the "O&R Hourly Plan".

     The CECONY Weekly Plan, the CECONY Management Plan, the O&R Management Plan
and the O&R Hourly Plan are called the Prior Plans.

     The CECONY Weekly Plan, renamed the Consolidated Edison Thrift Savings
Plan, was also amended, effective January 1, 2001, to take into account the
Merger, among other things, and restated constitutes the single plan and a
continuation of each one of the Prior Plans.

                                                                               2


     In the Plan, CEI is the Company, CECONY is the Plan Sponsor and an
Employer, O&R is an Employer, and certain existing and future affiliates are, or
will become, Employers.

     The Plan is amended for the Family and Medical Leave Act of 1993, the
Uniformed Services Employment and Reemployment Rights Act of 1993, the
Retirement Protection Act of 1994, as enacted under the Uruguay Round Agreements
Act (General Agreement on Tariffs and Trade), the Small Business Job Protection
Act of 1996, and the Taxpayer Relief Act of 1997, and certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This
amended Plan is intended as god faith compliance with the requirements of EGTRRA
and is to be construed in accordance with EGTRRA and guidance issued thereunder.
Except as otherwise provided, the provisions effectuating EGTRRA will be
effective beginning January 1, 2002. The EGTRRA amendments supersede the
provisions of the Plan to the extent those provisions are inconsistent with the
provisions of the EGTRRA amendments.

     Additionally, the Plan document serves as the official plan document for
the Consolidated Edison Company of New York, Inc. Tax Reduction Act Stock
Ownership Plan ("TRASOP"). The TRASOP is a plan separate from the Plan. CECONY
has entered into a separate trust agreement with Vanguard Financing Trust
Company under the TRASOP. Participation in the TRASOP is frozen.

     The Plan is amended to take into account the changes made by the collective
bargaining agreement covering employees who are members of Local 1-2 of the
Utility Workers Union of America, AFL-CIO, as effective June 24, 2000, Local 3
of the International Brotherhood of Electrical Workers, AFL-CIO, as effective
June 24, 2001, and

                                                                               3


the collective bargaining agreement for Local 503 of the International
Brotherhood of Electrical Workers, AFL-CIO, as effective June 20, 2000.

     Except as otherwise specifically provided herein, the rights and benefits
of any Participant who retires or whose employment is terminated are determined
in accordance with the provisions of the Plan as in effect and operative at the
time of such retirement or termination.

     Effective May 8, 2002, the Company amended the Plan to incorporate, as a
separate part, an employee stock ownership plan ("ESOP"). All Participants are
eligible to participate in the ESOP. Any Participant who elects as an Investment
Fund, the Company Stock Fund for his or her Employer Contributions, will be
deemed to be an ESOP Participant. Only Employer Contributions will be
contributed to the ESOP.

                                                                               4


                                    ARTICLE I

                                   DEFINITIONS

     The following words and phrases have the following meanings in the Plan
unless a different meaning is plainly required by the context:

     1.01    ACCOUNT BALANCE means the amount credited to a Participant
consisting of one or more of his or her Subaccounts, as the case may be,
including his or her Pre-Tax Contributions Subaccount, After-Tax Contributions
Subaccount, Rollover Contributions Subaccount, Employer Contributions
Subaccount, TRASOP, Transferred Employer and Employee PAYSOP Contributions
Subaccount, ESOP Account and other amounts transferred to the Plan which are
accounted for under the Plan under such classification.

     1.02    ACTUAL DEFERRAL PERCENTAGE means, for each Highly Compensated
Employee who is a Participant, the ratio, expressed as a percentage, of (1) the
amount of Pre-Tax Contributions (including Excess Pre-Tax Contributions) for the
current Plan Year to (2) the Highly Compensated Participant's Statutory
Compensation for the entire Plan Year (whether or not the Eligible Employee was
a Participant for the entire Plan Year). The Actual Deferral Percentage of each
Non-highly Compensated Employee who is a Participant is the ratio, expressed as
a percentage, of (1) the amount of Pre-Tax Contributions (excluding Excess
Pre-Tax Contributions) for the prior Plan Year to (2) the Non-Highly Compensated
Employee's Statutory Compensation for the portion of the prior Plan Year in
which the Participant was an Eligible Employee. For purposes of computing the
Actual Deferral Percentage, an Eligible Employee who would be a Participant but
for the failure to make Pre-Tax Contributions shall be treated as a Participant
on whose behalf no Pre-Tax Contributions are made. The Actual Deferral
Percentage of each Eligible Employee shall be rounded to the

                                                                               5


nearest 100th of 1% of each such Eligible Employee's Statutory Compensation. For
purposes of determining the Actual Deferral Percentage for a Plan Year, Pre-Tax
Contributions may be taken into account for a Plan Year only if they:

     (a) relate to compensation that either would have been received by the
Eligible Employee in the Plan Year but for the deferral election, or are
attributable to services performed by the Eligible Employee in the Plan Year and
would have been received by the Eligible Employee within 2 1/2 months after the
close of the Plan Year but for the deferral election;

     (b) are allocated to the Eligible Employee as of a date within that Plan
Year and the allocation is not contingent on the participation or performance of
service after such date; and

     (c) are actually paid to the Trustee no later than 12 months after the end
of the Plan Year to which the contributions relate.

     1.03    AFFILIATE means any company that is a member of a controlled group
of corporations (as defined in Code Section 414(b)) that also includes as a
member the Company; any trade or business under common control (as defined in
Code Section 414(c)) with the Company; any organization (whether or not
incorporated) that is a member of an affiliated service group (as defined in
Code Section 414(m)) that includes the Company; and any other entity required to
be aggregated with the Company pursuant to regulations under Code Section
414(o). Notwithstanding the foregoing, the definitions in Code Sections 414(b)
and (c) shall be modified as provided in Code Section 415(h).

     1.04    AFTER-TAX CONTRIBUTION means a contribution made by a Participant
of amounts after income taxes have been withheld on the amount and all
dividends, income, gains and losses attributable thereto. After-Tax
Contributions include Participating

                                                                               6


Contributions and Non-participating Contributions. In the case of an O&R
Participant, After-Tax Contributions include Transferred Employee PAYSOP
Contributions.

     1.05    AFTER-TAX CONTRIBUTIONS SUBACCOUNT means the account into which is
credited all of a Participant's After-Tax Contributions within which shall be
separately accounted, if applicable, a Participant's Participating Contributions
and Non-Participating Contributions.

     1.06    ANNUAL DOLLAR LIMIT means, effective January 1, 1994, in accordance
with Code Section 401(a)(17), $150,000, except that, if for any calendar year
from 1994 to 2001 the Cost-of-Living Adjustment is equal to or greater than
$10,000, then the Annual Dollar Limit for any Plan Year beginning January 1,
1995, shall be increased by the amount of such Cost-of-Living Adjustment,
rounded to the next lowest multiple of $10,000. Effective January 1, 2002, the
Annual Dollar Limit is increased to $200,000 and increased each subsequent Plan
Year by the Cost-of-Living Adjustment equal to or greater than $5,000.

     1.07    ANNUITY STARTING DATE means the first day of the first period for
which an amount is paid following a Participant's retirement or other
termination from employment.

     1.08    AVERAGE CONTRIBUTION PERCENTAGE means, with respect to a specified
group of Eligible Employees for a Plan Year, the average of the actual
Contribution Percentages (calculated separately for each Participant in each
specified group). The Contribution Percentage for each group of Eligible
Employees will be calculated to the nearest on one-hundredth of one percent.

     1.09    AVERAGE ACTUAL DEFERRAL PERCENTAGE means, with respect to a
specified group of Eligible Employees, the average of the Actual Deferral
Percentages (calculated separately

                                                                               7


for each Participant in each specified group). The Actual Deferral Percentage
for each group of Eligible Employees will be calculated to the nearest one
one-hundredth of one percent.

     1.10    BENEFICIARY means the person or persons, trust or other recipient
determined in accordance with the provisions of Section 11.03 to succeed to a
Participant's Account Balance under the Plan in the event of the death of such
Participant prior to the entire distribution of such Account Balance.

     1.11    BOARD means the Board of Trustees of CECONY.

     1.12    BREAK IN SERVICE means a Plan Year in which an Employee completes
500 or fewer Hours of Service. Solely for purposes of determining whether a
Break-in-Service has occurred, an Employee who is absent from work on account of
the Employee's pregnancy, the birth of the Employee's child, the placement of a
child with the Employee in connection with the adoption of that child by the
Employee, for purposes of caring for that child or for a Family and Medical
Leave Act ("FMLA"), shall be deemed to have earned at least 501 Hours of Service
in the Plan Year in which he or she is absent from work or the immediately
following Plan Year, whichever Plan Year is necessary to first avoiding a Break
in Service.

     1.13    CECONY means the Consolidated Edison Company of New York, Inc., and
any successor by merger, purchase or otherwise.

     1.14    CECONY MANAGEMENT EMPLOYEE means an Employee employed by and on the
management payroll of CECONY.

     1.15    CECONY MANAGEMENT PARTICIPANT means a CECONY Management Employee
who is a Participant.

     1.16    CECONY MANAGEMENT PLAN means the Con Edison Thrift Savings Plan for
Management Employees, as in effect and prior to January 1, 2001.

                                                                               8


     1.17    CECONY PARTICIPANT means a CECONY Management Participant and/or a
CECONY Weekly Participant.

     1.18    CECONY WEEKLY EMPLOYEE means an Employee employed by and on the
payroll of CECONY who is (a) a member of the collective bargaining unit
represented by Local 1-2 of the Utility Workers' Union of America, AFL-CIO or
(b) a member of the collective bargaining unit represented by Local 3 of the
International Brotherhood of Electrical Workers, AFL-CIO.

     1.19    CECONY WEEKLY PARTICIPANT means a CECONY Weekly Employee who is a
Participant.

     1.20    CECONY WEEKLY PLAN means the Con Edison Retirement Income Savings
Plan for Weekly Employees, as in effect on December 31, 2000.

     1.21    CEI means Consolidated Edison, Inc.

     1.22    CEI AFFILIATE OR CEI AFFILIATES means one, more than one or all, as
the context indicates, of Consolidated Edison Communications, Inc. (CEC);
Consolidated Edison Solutions, Inc. (CES); Consolidated Edison Energy, Inc.
(CEE); Consolidated Edison Development, Inc. (CED); Consolidated Edison Energy
Massachusetts, Inc. (CEEM); CED Operating Company, L.P. ("CEDOC") and any future
Affiliate who becomes an Employer.

     1.23    CEI EMPLOYEE means an Employee of a CEI Affiliate.

     1.24    CEI PARTICIPANT means a CEI Employee who is a Participant in the
Plan.

     1.25    CODE means the Internal Revenue Code of 1986, as amended from time
to time.

                                                                               9


     1.26    COMPANY means Consolidated Edison, Inc. or any successor by merger,
purchase or otherwise, that assumes the obligations of this Plan with respect to
its Eligible Employees.

     1.27    COMPANY STOCK FUND shall have the meaning set forth in Plan Section
5.03.

     1.28    COMPENSATION means

     (a)     for a CECONY Weekly Employee, straight time wages, paid for a
Payroll Period and determined prior to any reduction for --

             (i)     Pre-Tax Contributions,

             (ii)    Section 125 Contributions, and

             (iii)   Section 132 Contributions.

     Compensation is determined by excluding bonuses, overtime pay, premium pay,
incentive compensation, severance pay, deferred compensation and all other forms
of special pay;

     (b)     for a CECONY Management Employee, a CEI Participant or an O&R
Management Employee, base salary in a payroll period, determined prior to any
reduction for:

             (i)     Pre-Tax Contributions,

             (ii)    Section 125 Contributions, or

             (iii)   Section 132 Contributions.

     Compensation is determined by excluding bonuses, overtime pay,
incentive compensation, commissions, severance pay, deferred compensation and
all other forms of special pay; and

                                                                              10


     (c)     for an O&R Hourly Employee who is not a part-time Employee, forty
times the base hourly wage to an Eligible Employee in a week determined prior to
any reduction for Pre-Tax Contributions and Section 125 Contributions.
Compensation shall not include bonus, overtime, severance pay or other special
pay, or any other employer contributions to another deferred compensation plan
or employee welfare benefit plan. In the case of an O&R Participant who is a
part-time Eligible Employee, twenty shall be substituted for forty in the
preceding sentence.

     (d)     Compensation for a Plan Year in excess of the Annual Dollar Limit
for such Plan Year shall be disregarded.

     1.29    CONTRIBUTION PERCENTAGE for a Highly Compensated Employee is the
ratio, expressed as a percentage, of After-Tax Contributions and Employer
Contributions on behalf of the Highly Compensated Employee for the current Plan
Year to the Highly Compensated Employee's Statutory Compensation for such Plan
Year (whether or not the Employee was a Participant for the entire Plan Year).
Contribution Percentage for a Non-Highly Compensated Employee is the ratio,
expressed as a percentage, of After-Tax Contributions and Employer Contributions
on behalf of the Non-Highly Compensated Employee for the prior Plan Year to the
Non-Highly Compensated Employee's Statutory Compensation for the portion of such
Plan Year in which the Participant was an Eligible Employee. However, Employer
Contributions shall not be taken into account to the extent they are forfeited
either to correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Pre-Tax Contributions, Excess Contributions, or
Excess Aggregate Contributions. The Contribution Percentage of each Eligible
Employee shall be rounded to the nearest one-hundredth of one percent of such
Employee's Statutory Compensation.

                                                                              11


     1.30    COST-OF-LIVING ADJUSTMENT means the cost of living adjustment
prescribed by the Secretary of the Treasury under Code Section 415(d) and
applied to such items and in such manner as the Secretary shall provide.

     1.31    DISABILITY means total and permanent physical or mental disability,
as evidenced by (a) receipt of a Social Security disability pension or (b)
waiver of premium under an Employer's group term life insurance plan.

     1.32    EARNINGS means the amount of income, if any, to be returned to an
affected Participant with any Excess Pre-Tax Contributions, Excess Contributions
or Excess Aggregate Contributions. Earnings on Excess Pre-Tax Contributions and
Excess Contributions shall be determined by multiplying the income earned on the
Subaccount of the Participant for the Plan Year by a fraction, the numerator of
which is the Excess Pre-Tax Contributions or Excess Contributions, as the case
may be, for the Plan Year and the denominator of which is the Subaccount balance
at the end of the Plan Year, disregarding any income or loss occurring during
the Plan Year. Earnings on Excess Aggregate Contributions shall be determined in
a similar manner by substituting the sum of the Employer Contributions
Subaccount and After-Tax Contributions Subaccount for the Pre-Tax Subaccount,
and the Excess Aggregate Contributions for the Excess Pre-Tax Contributions and
Excess Contributions in the preceding sentence.

     1.33    ELIGIBLE EMPLOYEE means a CECONY Weekly Employee, CECONY Management
Employee, an O&R Hourly Employee, an O&R Management Employee, and a CEI
Employee.

     1.34    EMPLOYEE means an individual who is employed by and a common law
employee of the Company or an Affiliate and receives Compensation other than a
pension,

                                                                              12


severance pay, retainer or fee under contract. The term Employee excludes any
Leased Employee.

     1.35    EMPLOYER means one, more than one, or all, as the context requires
of CECONY, O&R, and each CEI Affiliate. Employer also means each newly created,
future established or acquired Affiliate to the extent that such Affiliate
elects to participate and CECONY approves its participation in the Plan.

     1.36    EMPLOYER CONTRIBUTION means a contribution to the Trust Fund made
by an Employer on behalf of a Participant.

     1.37    EMPLOYER CONTRIBUTIONS SUBACCOUNT means the Subaccount into which
is credited a Participant's Employer Contributions.

     1.38    ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     1.39    ESOP means, effective on the ESOP Effective Date, the Consolidated
Edison Employee Stock Ownership Plan ("ESOP"), which is incorporated into and
becomes a separate plan within this Plan.

     1.40    ESOP EFFECTIVE DATE means May 8, 2002.

     1.41    ESOP TRUST FUND means that part of the Trust Fund held exclusively
for the ESOP Accounts of the ESOP Participants.

     1.42    EXCESS AGGREGATE CONTRIBUTIONS means with respect to any Plan Year,
the excess of:

     (a)     The actual Contribution Percentage(s) taken into account in
computing the numerator of the Average Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over

                                                                              13


     (b)     The maximum actual Contribution Percentages permitted by the
Average Contribution Percentage test determined by reducing contributions
made on behalf of Highly Compensated Employees in order of their Contribution
Percentage beginning with the highest of such percentage.

     Such determination shall be made after first determining Excess Pre-Tax
Contributions and then Excess Contributions. In no case shall the amount of
Excess Aggregate Contributions with respect to any Highly Compensated Employee
exceed the amount of After-Tax Contributions and Employer Contributions made on
behalf of such Highly Compensated Employee for the Plan Year.

     1.43    EXCESS CONTRIBUTIONS means, with respect to any Plan Year, the
excess of:

     (a)     the aggregate amount of Employer Contributions actually taken into
account in computing the Average Actual Deferral Percentage of Highly
Compensated Employees for such Plan Year, over

     (b)     the maximum amount of Employer's contributions permitted by the
Average Actual Deferral Percentage test (determined by reducing contributions
made on behalf of Highly Compensated Employees in order of the Actual average
Deferral Percentages, beginning with the highest of such percentages).

     In no case shall the amount of Excess Contributions for a Plan Year with
respect to any Highly Compensated Employee exceed the amount of Pre-Tax
Contributions made on behalf of such Highly Compensated Employee for the Plan
Year.

     1.44    EXCESS DEFERRAL PERCENTAGE means the excess of:

     (a)     the Average Deferral Percentage for the group of eligible Highly
Compensated Employees, over

                                                                              14


     (b)     the Average Deferral Percentage limit permissible to such group of
Highly Compensated Employees.

     1.45    EXCESS PRE-TAX CONTRIBUTIONS means those Pre-Tax Contributions that
are includible in a Participant's gross income under Code Section 402(g) to the
extent the Participant's Pre-Tax Contributions exceed the dollar limitation
under Code Section 402(g).

     1.46    HIGHLY COMPENSATED EMPLOYEE means any Employee of the Company or an
Affiliate (whether or not an Eligible Employee) who during the look-back year
received Statutory Compensation in excess of $80,000, adjusted by the
Cost-of-Living Adjustment and, at the election of the Company or CECONY, was in
the "Top Paid Group." The term "Top Paid Group" includes all Employees who are
among the 20% highest paid. A Highly Compensated Management Employee means a
Highly Compensated Employee who is a CECONY Management Employee, an O&R
Management Employee, or a CEI Employee who is not covered by a collective
bargaining agreement. A Highly Compensated Union Employee is a Highly
Compensated Employee who is a Local 1-2 Employee, Local 3 Employee, and an O&R
Hourly Employee who is covered by a collective bargaining agreement.

     1.47    HOUR OF SERVICE means, with respect to any applicable computation
period,

     (a)     each hour for which:

             (i)     the Employee is paid or entitled to payment for the
                     performance of duties for the Company or an Affiliate;

             (ii)    the Employee is paid or entitled to payment by the Company
                     or an Affiliate on account of a period during which no
                     duties are performed, whether or not the employment
                     relationship has terminated, due to

                                                                              15


                     vacation, holiday, illness, incapacity (including
                     disability),layoff, jury duty, military duty or leave of
                     absence; and

             (iii)   back pay, irrespective of mitigation of damages, is either
                     awarded or agreed to by the Company or an Affiliate,
                     excluding any hour credited under (a)(i) or (ii), which
                     shall be credited to the computation period or periods to
                     which the award, agreement or payment pertains rather than
                     to the computation period in which the award, agreement or
                     payment is made.

     (b)     No hours shall be credited on account of any period during which
the Employee performs no duties and receives payment solely for the purpose of
complying with unemployment compensation, workers' compensation or disability
insurance laws. Hours of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically-related expenses
incurred by the employee. The Hours of Service credited shall be determined as
required by Title 29 of the Code of Federal Regulations, Sections 2530.200b-2(b)
and (c).

     (c)     With regard to an Employee for whom a record of his or her Hours of
Service is not maintained,

             (i)     One day of employment equals 10 Hours of Service;

             (ii)    One week of employment equals 45 Hours of Service; and

             (iii)   One month of employment equals 190 Hours of Service.

     1.48    INVESTMENT FUND means an investment fund available under the Plan
for investment of assets held in the Trust Fund or the ESOP Trust Fund.

                                                                              16


     1.49    INVESTMENT MANAGER means an investment manager as defined in ERISA
Section 3(38), which is appointed by the Named Fiduciaries.

     1.50    LEASED EMPLOYEE means any person performing services for the
Company or an Affiliate as a leased employee as defined in Code Section 414(n).
In the case of any person who is a Leased Employee before or after a period of
service as an Employee, the entire period during which he or she has performed
services as a Leased Employee shall be counted as service as an Employee for all
purposes of the Plan, except that he or she shall not, by reason of that status,
become a Participant of the Plan.

     1.51    LOAN RESERVE shall have the meaning set forth in Section 9.08.

     1.52    LOCAL 1-2 EMPLOYEE means an Employee represented by Local 1-2,
Utility Workers' Union of America, AFL-CIO.

     1.53    LOCAL 3 EMPLOYEE means an Employee represented by Local 3,
International Brotherhood of Electrical Workers, AFL-CIO.

     1.54    NAMED FIDUCIARIES means the persons designated as named fiduciaries
of the Plan pursuant to Section 10.01.

     1.55    NON-HIGHLY COMPENSATED MANAGEMENT EMPLOYEE means any CECONY
Management Employee, O&R Management Employee or CEI Employee who is not covered
by a collective bargaining agreement and not a Highly Compensated Employee.

     1.56    NON-PARTICIPATING CONTRIBUTION means the portion of a CECONY
Participant's or CEI Participant's Pre-Tax Contributions or After-Tax
Contributions that is not matched by Employer Contributions.

     1.57    O&R means Orange and Rockland Utilities, Inc.

                                                                              17


     1.58    O&R EMPLOYEE means an Employee employed by and on the active
payroll of O&R. A person designated by O&R as a co-op employee or employed in a
co-op capacity, as such term is defined by O&R, and any employee employed on a
temporary or seasonal basis shall not be considered an O&R Employee or an
Eligible Employee.

     1.59    O&R HOURLY EMPLOYEE means an Employee employed by and on the active
payroll of O&R who is a member of the collective bargaining unit represented by
Local 503 of the International Brotherhood of Electrical Workers, AFL-CIO.

     1.60    O&R HOURLY PLAN means the Orange and Rockland Utilities, Inc.
Hourly Group Savings Plan, as in effect on December 31, 2000.

     1.61    O&R MANAGEMENT EMPLOYEE means an Employee employed by and on the
active management payroll of O&R and is not an O&R Hourly Employee.

     1.62    O&R MANAGEMENT PLAN means the Orange and Rockland Utilities, Inc.
Management Employees' Savings Plan, as in effect on December 31, 2000.

     1.63    O&R PARTICIPANT means an O&R Hourly Employee and an O&R Management
Employee who is participating in the Plan.

     1.64    PARTICIPANT means any person who has an Account Balance in the
Plan.

     1.65    PARTICIPATING CONTRIBUTION means the portion of the Participant's
Pre-tax Contributions or After-Tax Contributions for which there is a matching
Employer Contribution.

     1.66    PAYROLL PERIOD means

     (a)     for a CECONY Weekly Employee, a one week period commencing on a
Sunday and ending on the next following Saturday;

                                                                              18


     (b)     for a CECONY Management Employee, a one month period commencing on
the first and ending on the last day of the month;

     (c)     for an O&R Participant, the dates that O&R provides payroll
information to the Trustees in order to determine the amounts that should be
withheld from an O&R Participant's pay as Pre-Tax Contributions and/or After-Tax
Contributions and the amounts that should be rendered by O&R to the Trustee on
behalf of an O&R Participant as an Employer Contribution; and

     (d)     for a CEI Participant, the prevailing payroll period for that CEI
Affiliate.

     1.67    PLAN means the Consolidated Edison Thrift Savings Plan, as amended
from time to time, as set forth herein.

     1.68    PLAN ADMINISTRATOR means the Plan Administrator appointed pursuant
to Section 10.01 to administer the Plan and the ESOP.

     1.69    PLAN YEAR means the calendar year.

     1.70    PRE-TAX CONTRIBUTION means an Employer's contributions made to the
Plan at the election of the Participant, in lieu of cash compensation and before
income taxes have been withheld on the amount, and includes contributions made
pursuant to a salary reduction agreement. In the case of an O&R Participant,
Pre-Tax Contributions include those Transferred Employer PAYSOP-Contributions
that were transferred to the O&R Plan. Pre-Tax Contributions includes amounts
deemed as Pre-Tax Contributions pursuant to an election under a cafeteria plan
maintained by CECONY.

     1.71    PRE-TAX CONTRIBUTIONS SUBACCOUNT means the Subaccount into which is
credited all of a Participant's Pre-Tax Contributions and within which are
separately accounted for as Participating Contributions and Non-Participating
Contributions.

                                                                              19


     1.72    PRIOR PLAN OR PRIOR PLANS means one, more than one, or all, as the
context requires, of the CECONY Management Plan, the CECONY Weekly Plan, the O&R
Hourly Plan and the O&R Management Plan.

     1.73    RECORD KEEPER means the individual(s) or firm selected by the Plan
Administrator to provide record keeping and Participant accounting services for
the Plan, including maintenance of separate accounts for Participants in
accordance with the provisions of Section 5.04.

     1.74    RETIREMENT means termination of employment by a Participant under
circumstances in which he or she is entitled to receive an early retirement
pension allowance, normal retirement pension allowance or late retirement
pension allowance under any Employer defined benefit plan. Retirement means
termination from employment on or after his or her sixty-fifth birthday.

     1.75    ROLLOVER CONTRIBUTIONS means amounts contributed pursuant to Plan
Section 3.08.

     1.76    ROLLOVER CONTRIBUTIONS SUBACCOUNT means the account credited with a
Participant's Rollover Contributions and earnings on those contributions.
Effective for Rollover Contributions received on or after January 1, 2002, a
Rollover Contributions Subaccount may include a separately accounted for
after-tax rollover Subaccount attributable to after-tax rollover contributions
directly transferred to this Plan.

     1.77    SECTION 125 CONTRIBUTIONS means Employee contributions made
pursuant to a salary reduction agreement under a cafeteria plan as that term is
defined in Code Section 125.

                                                                              20


     1.78    SECTION 132 CONTRIBUTIONS means Employee contributions made for
qualified transportation expenses under a transportation reimbursement account.

     1.79    SHARES means issued and outstanding shares of common stock of the
Company and shall include fractional shares of such common stock.

     1.80    STATUTORY COMPENSATION means the wages, salaries, and other amounts
paid in respect of an Employee for services actually rendered to the Company or
an Affiliate, including by way of example, shift premiums, bonuses, overtime
payments and similar payments, but excluding non-taxable contributions to
deferred compensation plans, taxable non-qualified stock options and other
distributions which receive special tax benefits under the Code. Statutory
Compensation includes Pre-Tax Contributions, Section 125 Contributions and
Section 132 Contributions. Statutory Compensation may not exceed the Annual
Dollar Limit. To the extent that the above definition does not satisfy the
non-discrimination requirements, Statutory Compensation may be redefined, by the
Plan Administrator, to meet an alternative definition of compensation, including
within Code Section 415(c)(3).

     1.81    TOP HEAVY GROUP means any required aggregation group (as defined in
Section 12.03) or any permissive aggregation group (as defined in Section 12.03)
in which more than 60% of the sum of (a) the aggregate account balances under
all plans in the group and (b) the aggregate present value of accrued benefits
under all plans in the group is allocated to key employees. For the purpose of
this definition, present value shall be determined on basis of the applicable
interest rate and applicable mortality table as set forth in the Company's
defined benefit plan.

                                                                              21


     1.82    TOP-HEAVY PLAN means any defined contribution plan or defined
benefit plan of an Employer or the Company under which more that 60% of the sum
of (a) its aggregate account balances and (b) the present value of its aggregate
accrued benefits is allocated to key employees. For the purposes of this
definition present value shall be determined on the basis of the applicable
interest rate and applicable mortality table as set forth in the Company's
defined benefit plan.

     1.83    TRANSFERRED EMPLOYER AND EMPLOYEE PAYSOP CONTRIBUTIONS means those
amounts transferred to the O&R Management Plan or the O&R Hourly Plan on behalf
of an O&R Employee from the terminated Orange and Rockland Utilities, Inc.
Payroll-Based Employee Stock Ownership Plan.

     1.84    TRASOP means the Tax Reduction Act Stock Ownership Plan of
Consolidated Edison Company of New York, Inc., as included within this plan
document, effective as of July 1, 1988.

     1.85    TRASOP ACCOUNT means an account maintained under the TRASOP by the
Trustee of the TRASOP Trust Fund for an Employee.

     1.86    TRASOP TRUST FUND means the Trust Fund established solely for the
TRASOP Accounts.

     1.87    TRUST FUND means the trust fund described in Article 5.

     1.88    TRUSTEE means the trustee appointed and acting as trustee of the
Trust Fund, the TRASOP Trust Fund and the ESOP Trust Fund.

     1.89    VESTED PORTION means the portion of an Account Balance in which the
Participant has a nonforfeitable interest as provided in Article 6.

                                                                              22


     1.90    YEAR OF SERVICE means each Plan Year in which an Employee is
credited with at least 1000 Hours of Service. An Employee is credited with a
Year of Service in the month in which he or she completes 1000 Hours of Service.
An Employee will be credited with a Year of Service in each Plan Year in which
the Employee is absent on account of qualified military service, in accordance
with Code Section 414(u).

                                                                              23


                                   ARTICLE II

                          ELIGIBILITY AND PARTICIPATION

     2.01    ELIGIBILITY

     (a)     Any person who was a Participant in a Prior Plan will continue to
be a Participant in this Plan.

     (b)     Each Eligible Employee is eligible to participate in the Plan.

     (c)     Each Eligible Employee who was a Participant in, and had an account
under the TRASOP on December 31, 2000, will continue to participate in the
TRASOP and have a TRASOP Account. As of July 1, 1988, the TRASOP was closed to
new Eligible Employees.

     2.02    PARTICIPATION

     (a)     An Eligible Employee becomes a Participant by satisfying the
service requirements, if any, as described herein, and by completing the
enrollment process described below or such other enrollment process as may be
prescribed by the Plan Administrator. An Eligible Employee must elect to make
contributions to the Trust Fund in an amount or percentage as permitted by
Section 3.01. In general, a Participant's contributions are made by regular
payroll deductions authorized from time to time by such Participant in such
manner and on such conditions as may be prescribed by the Plan Administrator.

        (1)  CECONY Weekly Employee. A CECONY Weekly Employee may become a
             Participant after completing 3 months of service. Participation may
             begin with the next immediately following Payroll Period by making
             an enrollment election not later than the day specified by the Plan
             Administrator.

                                                                              24


        (2)  CECONY Management Employee or CEI Employee. A CECONY Management
             Employee or a CEI Employee may become a Participant in a calendar
             month following his or her date of hire by making an enrollment
             election on or before the 20th day of the first calendar month of
             hire or any subsequent calendar month.

        (3)  O&R Hourly Employee. An O&R Hourly Employee may become a
             Participant in any month following the completion of one Year of
             Service. Thereafter, an O&R Hourly Employee may participate by
             making an election on or before the 24th day of any month.
             Participation will become effective on the first day of the first
             Payroll Period in the month following the month in which the
             election is made.

        (4)  O&R Management Employee. An O&R Management Employee may become a
             Participant in any month upon the completion of six months of
             service and making an election on or before the 24th day of that
             sixth month or any month thereafter. Participation will become
             effective on the first day of the first Payroll Period in the month
             immediately following the month in which the election is made. Six
             months of participation means a six-month period in which an O&R
             Management Employee is credited with at least five hundred Hours of
             Service. Such six-month period will commence on the date the O&R
             Management Employee first completes an Hour of Service.

        (5)  Other Eligible Employees. To the extent that a person becomes an
             Eligible Employee and is not otherwise covered by a designated
             classification, he or she may become a Participant in the month in
             which his or her Employer

                                                                              25


             adopts the Plan as provided in the Plan Section 11.05 and satisfies
             whatever eligibility requirements, if any, his or her Employer
             selects.

     2.03    REEMPLOYMENT OF FORMER EMPLOYEES AND FORMER PARTICIPANTS

     Any person reemployed as an Eligible Employee, who previously was eligible
to become a Participant, will become a Participant upon making an effective
enrollment election as may be prescribed by the Plan Administrator.

     2.04    TRANSFERRED PARTICIPANTS

     A Participant who remains in the employ of the Company or an Affiliate but
ceases to be an Eligible Employee will continue to be a Participant in the Plan
but will not be eligible to make After-Tax Contributions or Pre-Tax
Contributions or have Employer Contributions made on his or her behalf while his
or her employment status is other than as an Eligible Employee.

     2.05    TERMINATION OF PARTICIPATION

     A Participant's participation terminates on the date he or she is no longer
employed by the Company or Affiliate and no longer has an Account Balance.

     2.06    PARTICIPATION IN ESOP

     In accordance with Article XIV, and effective on the ESOP Effective Date,
each Participant who receives an Employer Contribution is eligible to
participate in the ESOP.

                                                                              26


                                   ARTICLE III

                                  CONTRIBUTIONS

     3.01    CONTRIBUTION ELECTION

     (a)     CECONY WEEKLY PARTICIPANT. A CECONY Weekly Participant may elect to
contribute for each of his or her basic straight-time Hours of Service not in
excess of 40 in a Payroll Period, in one cent multiples or in the maximum
permissible amount if such maximum is not a multiple of one cent, as follows:
(i) for a Local 3 Employee for any Payroll Period beginning on or after: (x)
January 1, 2000, and before January 1, 2001, not in excess of $3.52 per hour;
(y) January 1, 2001, and before January 1, 2002, not in excess of $3.72 per
hour; and (z) January 1, 2002, not in excess of $20.00 per hour; and (ii) for a
Local 1-2 Employee for any Payroll Period beginning on or after: (x) January 1,
2000, and before January 1, 2001, not in excess of $3.52 per hour; (y) January
1, 2001, not in excess of $6.75 per hour; and (z) January 1, 2002, not in excess
of $20.00 per hour. In any case, effective January 1, 2002, a CECONY Weekly
Participant may contribute up to but no more than the lesser of $20.00 per hour
or 50% of basic straight-time pay. Such maximum amount of contributions shall be
subject to limitations imposed under the Code. At the time a CECONY Weekly
Participant elects a contribution amount, he or she shall, in such manner and on
such conditions as may be prescribed by the Plan Administrator, designate which
portion is to be Pre-Tax Contributions and which is to be After-Tax
Contributions. A CECONY Weekly Participant may elect to make Pre-Tax
Contributions whether or not he or she elects to make After-Tax Contributions
and may elect to make After-Tax Contributions whether or not he or she elects to
make Pre-Tax Contributions. Pre-Tax Contributions and After-Tax Contributions
are further limited as provided below and in Article 8.

                                                                              27


     (b)     CECONY MANAGEMENT AND A CEI PARTICIPANT. For Plan Years beginning
before January 1, 2002, a CECONY Management Participant and a CEI Participant
may elect to reduce his or her Compensation payable while a Participant by at
least 1% and not more than 18%, in multiples of 1%, and have that amount
contributed to the Plan as Pre-Tax Contributions and/or After-Tax Contributions.
A CECONY Management Participant or CEI Participant may elect to make Pre-Tax
Contributions whether or not he or she elects to make After-Tax Contributions
and may elect to make After-Tax Contributions whether or not he or she has
elected to make Pre-Tax Contributions. An amount contributed to the Plan
pursuant to the election of a CECONY Management Participant under a cafeteria
plan under Code Section 125 may be designated as a Pre-Tax Contribution or an
After-Tax Contribution. The maximum total percentage of Compensation which the
CECONY Management Participant and CEI Participant may elect to contribute in the
aggregate as Pre-Tax Contributions and After-Tax Contributions is 18%. Pre-Tax
Contributions and After-Tax Contributions are further limited as provided below
and in Article 8. For Plan Years beginning on and after January 1, 2002, a
CECONY Management Participant and a CEI Participant may elect to contribute up
to 50% of his or her Compensation as Pre-Tax Contributions and/or After-Tax
Contributions, subject to the maximum annual addition limit set forth in Section
8.03 of the Plan.

     (c)     O&R HOURLY PARTICIPANT. An O&R Hourly Participant may elect to
reduce his or her Compensation by at least 2% and not more than 20%, in
multiples of 1%, and have that amount contributed to the Plan as Pre-Tax
Contributions. Pre-Tax Contributions are further limited as provided below and
in Article 8.

                                                                              28


     (d)     O&R MANAGEMENT PARTICIPANT. For Plan Years beginning before
January 1, 2002, an O&R Management Participant may elect to reduce his or her
Compensation payable while a Participant by at least 2% and not more than 15%,
in multiples of 1%, and have that amount contributed to the Plan. Effective
January 1, 2002, an O&R Management Participant may contribute up to 50% of his
or her Compensation. At the time an O&R Management Participant elects a
contribution amount, he or she will designate which portion is to be Pre-Tax
Contributions and which is to be After-Tax Contributions. An O&R Management
Participant may elect to make Pre-Tax Contributions whether or not he or she
elects to make After-Tax Contributions and may elect to make After-Tax
Contributions whether or not he or she elects to make Pre-Tax Contributions.
Pre-Tax Contributions and After-Tax Contributions are to be further limited as
provided below and in Article 8.

     3.02    PRE-TAX CONTRIBUTION DOLLAR LIMITATION AND RE-CHARACTERIZATION

     In no event will a Participant's Pre-Tax Contributions made on his or her
behalf by the Company or an Affiliate to all plans, contracts or arrangements,
subject to the provisions of Code Section 402(g), in any calendar year exceed
$7,000 multiplied by the Cost-of-Living Adjustment. The Pre-Tax Contribution
limit will be increased for calendar year 2002 to $11,000; for calendar year
2003 to $12,000; for calendar year 2004 to $13,000; for calendar year 2005 to
$14,000; and for calendar year 2006 to $15,000. Beginning in calendar year 2006,
the $15,000 limit will be multiplied by the Cost-of-Living Adjustment,
increasing in $500 increments. Once a Participant's Pre-Tax Contributions in a
calendar year reach the applicable dollar limitation, his or her election of
Pre-Tax Contributions for the remainder of the calendar year will be canceled.
If so elected by a Participant, other than for an O&R Hourly Participant, excess
Pre-Tax Contributions will be re-characterized as After-Tax Contributions at the
same rate as was previously in effect for Pre-Tax Contributions. Each

                                                                              29


Participant affected by this Section 3.02 may elect to change or suspend the
rate at which he or she makes After-Tax Contributions. As of the first Payroll
Period of the calendar year following such cancellation, the Participant's
election of Pre-Tax Contributions will again become effective at the rate in
accordance with his or her most recent election.

     3.03    RETURN OF EXCESS PRE-TAX CONTRIBUTIONS

     In the event that the sum of the Pre-Tax Contributions and similar
contributions to any other qualified defined contribution plan maintained by the
Company or an Affiliate exceed the dollar limitation in Code Section 402(g) for
any calendar year, the Participant will be deemed to have elected a return of
Pre-Tax Contributions in excess of such limit ("Excess Pre-Tax Contributions")
from this Plan. Unless Excess Pre-Tax Contributions are characterized as
After-Tax Contributions, Excess Pre-Tax Contributions, together with Earnings,
will be returned to the Participant no later than the April 15th following the
end of the calendar year in which the Excess Pre-Tax Contributions were made.
The amount of Excess Pre-Tax Contributions to be returned for any calendar year
will be reduced by any Pre-Tax Contributions previously returned to the
Participant under Section 8.01 for that calendar year. In the event any Pre-Tax
Contributions returned under this Section 3.03 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions. In the event any
Pre-Tax Contributions returned under this Section 3.03 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions.

     3.04    EXCESS DEFERRALS TO OTHER PLANS

     If a Participant makes tax-deferred contributions under another qualified
defined contribution plan maintained by an employer other than the Company or an
Affiliate for any

                                                                              30


calendar year and those contributions when added to his or her Pre-Tax
Contributions result if Excess Pre-Tax Contributions, the Participant may
allocate all or a portion of the Excess Pre-Tax Contributions to this Plan. In
that event, the Excess Pre-Tax Contributions, together with Earnings, will be
returned to the Participant no later than the April 15th following the end of
the calendar year in which the Excess Pre-Tax Contributions were made. The Plan
is not required to return Excess Pre-Tax Contributions unless the Participant
notifies the Plan Administrator, in writing, by March 1st of the following
calendar year of the amount of the Excess Pre-Tax Contributions allocated to
this Plan. The amount of Excess Pre-Tax Contributions to be returned for any
calendar year will be reduced by any Pre-Tax Contributions previously returned
to the Participant under Section 8.01 for that calendar year. In the event any
Pre-Tax Contributions returned under this Section 3.04 were matched by Employer
Contributions, those Employer Contributions, together with Earnings, will be
forfeited and used to reduce future Employer Contributions.

     3.05    PARTICIPATING CONTRIBUTIONS ELIGIBLE FOR EMPLOYER CONTRIBUTIONS

     (a)     CECONY WEEKLY PARTICIPANT A Participating Contribution means that
amount of a Participant's contribution which is matched by an Employer
Contribution. In the instance of a CECONY Weekly Participant who is a Local 1-2
Employee, his or her contribution may not exceed: (1) 97 cents per hour for any
Payroll Period beginning on or after January 1, 2000, (2) $1.02 per hour for any
Payroll Period beginning on or after January 1, 2001, (3) $1.07 per hour for any
Payroll Period beginning on or after January 1, 2002, (4) $1.12 per hour for any
Payroll Period beginning on or after January 1, 2003, or (5) $1.17 per hour for
any Payroll Period beginning on or after January 1, 2004. Such contribution will
be the Local 1-2 Employee's Participating Contribution for such Payroll Period.
A Local 3 Employee's contribution may not exceed (1) $1.02 per hour for any

                                                                              31


Payroll Period beginning on or after January 1, 2001, (2) $1.07 per hour for any
Payroll Period beginning on or after January 1, 2002, (3) $1.12 per hour for any
Payroll Period beginning on or after January 1, 2003, (4) $1.17 per hour for any
Payroll Period beginning on or after January 1, 2004, or (5) $1.22 per hour for
any Payroll Period beginning on or after January 1, 2005. Such contributions
shall be the Local 3 Employee's Participating Contribution for such Payroll
Period. The amount, if any, by which a CECONY Weekly Participant's contribution
for a Payroll Period exceeds his or her Participating Contribution will be his
or her Non-Participating Contribution for such Payroll Period.

     CECONY will contribute on behalf of a CECONY Weekly Participant who elects
to make Pre-Tax Contributions or After-Tax Contributions for a Payroll Period an
amount equal to 50% of the aggregate Participating Contributions made by the
CECONY Weekly Participant for such Payroll Period matching first Pre-Tax
Contributions and then After-Tax Contributions. Employer Contributions are made
expressly conditional on the Plan satisfying the provisions of Article VIII. If
any portion of the Pre-Tax Contribution or After-Tax Contribution to which the
Employer Contribution relates is returned to the CECONY Weekly Participant under
Section 3.01, 8.01, 8.02 or 8.03, the corresponding Employer Contribution will
be forfeited, and if any amount of the Employer Contribution is deemed an Excess
Aggregate Contribution under Section 8.03, such amount will be forfeited in
accordance with the provisions of that Section.

     (b)     CECONY MANAGEMENT PARTICIPANT AND CEI PARTICIPANT CECONY and each
CEI Affiliate will contribute on behalf of each CECONY Management Participant or
CEI Participant, as the case may be, who elects to make Pre-Tax Contributions or
After-Tax

                                                                              32


Contributions an amount equal to 50% of the sum of the Pre-Tax Contributions
and After-Tax Contributions made on behalf of or by the CECONY Management
Participant or the CEI Participant to the Plan during each month, not to exceed
6% of Compensation for such month, to be matched first on Pre-Tax Contributions,
and then on After-Tax Contributions. Employer Contributions for a month will not
exceed 3% of the Participant's Compensation for such month. Employer
Contributions are made expressly conditional on the Plan satisfying the
provisions of Article VIII. If any portion of the Pre-Tax Contribution or
After-Tax Contribution to which an Employer Contribution relates is returned to
the CECONY Management Participant or CEI Participant under Section 3.01, 8.01,
8.02 or 8.03, the corresponding Employer Contribution will be forfeited, and if
any amount of the Employer Contribution is deemed an Excess Aggregate
Contribution under Section 8.03, the Excess Aggregate Contribution will be
forfeited in accordance with the provisions of Section 8.03. In the event a
CECONY Management Participant or CEI Participant elects to make Pre-Tax
Contributions and/or After-Tax Contributions in an amount which, when taking
into account his or her Employer Contributions, exceeds the maximum annual
additions, as defined and determined in Section 8.03 of the Plan, the Employer
will contribute an additional Employer contribution on behalf of such
Participant ("CECONY/CEI True- Up Contribution"). The CECONY/CEI True- Up
Contribution, will be made as soon as administratively possible after the end of
the Plan Year, for each such CECONY Management Participant and CEI Participant
who is employed at year end. The CECONY/CEI True-Up Contribution will equal the
difference between 3% of such Participant's Compensation on an annual basis
minus his or her total Employer Contributions made during the year.

     (c)     O&R HOURLY PARTICIPANT O&R will contribute on behalf of each O&R
Hourly Participant who elects to make Pre-Tax Contributions an amount equal to
50% of

                                                                              33


Pre-Tax Contributions up to the first "x" percent of Compensation of the O&R
Hourly Participant during each month, where beginning: (1) January 1, 2000, "x"
equals 3; (2) January 1, 2003, "x" equals 4; and (3) January 1, 2004, "x" equals
5 of the O&R Hourly Participant's Compensation for such month. In addition, as
soon as administratively possible after the end of the Plan Year, O&R will
contribute, as of the end of the Plan Year, for each O&R Hourly Participant who
is employed at year end and who in the prior Payroll Periods during that Plan
Year had made Pre-Tax Contributions at a rate in excess of, beginning (1)
January 1, 2000, 3%; (2) January 1, 2003, 4%; or (3) January 1, 2004, 5%; of the
O&R Hourly Participant's Compensation, an Employer Contribution equal to 50% of
the O&R Hourly Participant's Pre-Tax Contributions that were not previously
matched ("True-Up Contributions"). True-Up Contributions will not exceed such
amount as will result in the total O&R Employer Contributions, both those made
previously during the year and those as of year end, exceeding 50% of a O&R
Hourly Participant's Pre-Tax Contributions that do not exceed, beginning: (1)
January 1, 2000, 3%; (2) January 1, 2003, 4%; or (3) January 1, 2004, 5%, of the
O&R Hourly Participant's Compensation on an annual basis.

     (d)     O&R MANAGEMENT PARTICIPANT O&R will contribute on behalf of each
O&R Management Participant who elects to make Pre-Tax Contributions an amount
equal to 50% of the Pre-Tax Contributions made on behalf of or by the O&R
Management Participant to the Plan during each month not to exceed 3% of his or
her Compensation for the month. In addition, as soon as administratively
possible after the end of the Plan Year, O&R will contribute, as of the end of
the Plan Year, for each O&R Management Participant who is employed at year end
and who in the prior Payroll Periods during that Plan Year had made Pre-Tax
Contributions at a rate in excess of 3% of his or her Compensation, a True-Up

                                                                              34


Contribution equal to 50% of his or her Pre-Tax Contributions. True-Up
Contributions will not exceed such amount as will result in the total O&R
Employer Contributions, both those made previously during the year and those as
of year end, exceeding 50% of a O&R Management Participant's Pre-Tax
Contributions that do not exceed 3% of his or her Compensation on an annual
basis.

     3.06    ROLLOVER CONTRIBUTIONS

     (a)     Subject to such terms and conditions as the Plan Administrator may
determine to be appropriate, applied in a uniform and non-discriminatory manner
to all Eligible Employees, and without regard to any limitations on
contributions set forth in this Article 3, the Plan may receive from an Eligible
Employee for credit to his or her Rollover Contributions Subaccount, in cash,
any amount previously distributed (or deemed to have been distributed) to him or
her from a qualified plan or, beginning January 1, 2002, a traditional
individual retirement account ("IRA"), a government plan subject to Code Section
457 or a Code Section 403(b) tax sheltered annuity. The Plan may receive such
amount either from the Eligible Employee or in the form of a direct rollover.
Notwithstanding the foregoing, the Plan shall not accept any amount unless such
amount is eligible to be rolled over in accordance with applicable law and the
Eligible Employee provides evidence satisfactory to the Plan Administrator that
such amount qualifies for rollover treatment. Unless received by the Plan in the
form of a direct rollover, the rollover contribution must be paid to the Trustee
on or before the 60th day after the day it was received by the Eligible Employee
or be rolled over from an IRA. Effective January 1, 2002, an eligible rollover
distribution from an IRA is the amount of a distribution from an IRA that is
includible in gross income, including amounts attributable to an Employee's
personal IRA contributions made outside of a qualified plan. At the time
received by the Plan, the Eligible Employee

                                                                              35


shall, in such manner and on such conditions as may be prescribed by the Plan
Administrator, elect to invest the Rollover Contribution in the investment funds
then available under the Plan to a Participant. If the Eligible Employee fails
to make an investment election, 100% of the Rollover Contribution shall be
invested in the Fixed Income Fund.

     (b)     The Plan may also accept from a former Employee who is a
Participant a rollover or a direct rollover of an amount received from a defined
benefit plan sponsored by an Employer or from the TRASOP.

     (c)     Subject to terms and conditions as the Plan Administrator may
determine to be appropriate, applied and non-discriminatory manner to all
Participants, the Plan may receive on behalf of Participant a trust-to-trust
transfer from another qualified plan. Any Participant whose benefits are the
subject of a trust-to-trust transfer from another qualified plan to this Plan
will be entitled to receive benefits, rights and features from the Plan that are
no less than the benefits, rights and features he would be entitled to receive
from the other qualified plan immediately preceding the transfer. To the extent
feasible, such transfer shall be made on an in-kind basis. To the extent such
transfer is made in the form of cash, at the time received by the Plan the
Participant shall, in such manner and on such terms as may be prescribed by the
Plan Administrator, elect to invest the cash in the Investment Funds then
available under the Plan other than the Company Stock fund.

     3.07    CHANGES IN CONTRIBUTIONS

     A Participant may increase, reduce, suspend or resume his or her
contributions within the limits prescribed by Sections 3.01 and/or 3.02,
effective as of the next first Payroll Period, by making a new election, on or
before the date set by the Plan Administrator, in such manner and on such
conditions as may be prescribed by the Plan Administrator. A Participant may
make changes in contribution levels once a month.

                                                                              36


     3.08    PAYMENT TO TRUST

     Amounts contributed by Participants will be paid by each Employer to the
Trustee promptly and credited by the Trustee to their Accounts in accordance
with the certification of each Employer as to the names of the contributing
Participants and the respective amounts contributed by each Participant as
Participating Contributions, Non-Participating Contributions, Pre-Tax
Contributions, After-Tax Contributions and Rollover Contributions.

     3.09    NO CONTRIBUTIONS TO TRASOP

     No contributions to the TRASOP by any Employer or by Participants are
permitted.

     3.10    CATCH-UP CONTRIBUTIONS

     (a) Effective January 1, 2002, or at such later time as the Plan
Administrator may determine to implement, each "Catch-Up Participant," as
defined below, may contribute for each "Catch-Up Year," as defined below, an
amount not to exceed the lesser of the "Catch-Up Contribution," as defined
below, or the Catch-Up Participant's compensation reduced by any other Pre-Tax
Contributions for that Catch-Up Year.

     (b) Definitions:

             (i)    CATCH-UP PARTICIPANT means a Participant who has attained
                    age 50 by the last day of a Catch-Up Year and for whom no
                    additional Pre-Tax Contributions can be made for that
                    Catch-Up Year because of the application of the calendar
                    year annual dollar limit set forth in Code Section 402(g) or
                    any other limitations in the Plan.

             (ii)   CATCH-UP YEAR means Plan Year beginning January 2, 2002
                    ("CUY 2002"), January 1, 2003 ("CUY 2003"), January 1, 2004
                    ("CUY 2004"), January 1, 2005 ("CUY 2005"), or January 1,
                    2006 ("CUY 2006").

                                                                              37


             (iii)  CATCH-UP CONTRIBUTION means a Pre-Tax Contribution in the
                    amount of $1,000 for CUY 2002, $2,000 for CUY 2003, $3,000
                    for CUY 2004, $4,000 for CUY 2005, and $5,000 for CUY 2006.
                    For Plan Years beginning after CUY 2006, the $5,000 Catch-Up
                    Contribution is adjusted by the Cost of Living Adjustment,
                    increasing, when applicable, in $500 increments. Catch-Up
                    Contributions are not taken into account for purposes of
                    determining the Actual Deferral Percentage or Average Actual
                    Deferral Percentage.

     3.11    EMPLOYER CONTRIBUTIONS TO ESOP

     Employer Contributions made on behalf of an ESOP Participant are
automatically contributed to the ESOP.

                                                                              38


                                   ARTICLE IV

                   INVESTMENT ELECTIONS - TIMING AND FREQUENCY

     4.01    EMPLOYER CONTRIBUTIONS ELECTION

     A Participant may elect to have Employer Contributions allocated to his or
her Employer Contributions Subaccount invested, in multiples of 1%, in one or
more of the Investment Funds, including the Company Stock Fund. Effective May 8,
2002, Employer Contributions allocated to the Company Stock Fund are made to the
ESOP. If the Participant fails to make an election as to the Investment Fund(s)
for his or her Employer Contributions, 100% of such Contributions shall be
invested in the Fixed Income Fund. Any such election shall be made in such
manner and on such conditions as may be prescribed by the Plan Administrator.

     4.02    PARTICIPANT PRE-TAX CONTRIBUTIONS, AFTER-TAX CONTRIBUTIONS AND
             ROLLOVER CONTRIBUTIONS

     A Participant may elect to have his or her Pre-Tax Contributions, After-Tax
Contributions, and Rollover Contributions invested, in multiples of 1%, in any
Investment Fund other than the Company Stock Fund. If the Participant fails to
make an election as to the Investment Fund(s) for his or her contributions, 100%
of such contributions will be invested in the Fixed Income Fund.

     4.03    CHANGE OF ELECTION

     Subject to possible restrictions imposed on certain Funds by the Trustee or
an Investment Fund Manager, a Participant may change his or her investment
election regarding future contributions once a month and his or her existing
Account Balance once a day. Any

                                                                              39


election will be made in such manner and on such conditions as may be prescribed
by the Plan Administrator and subject to any restrictions imposed on an
Investment Fund.

     4.04    CERTIFICATION TO COMPANY

     For each Payroll Period, the Recordkeeper will certify to each Employer the
amount of Employer Contributions to be made on behalf of each Participant.

     4.05    FORFEITURES

     The total amount of the Trust Fund forfeited by Participants pursuant to
Section 7.02 or otherwise, will be invested in such Investment Fund as may be
specified by the Plan Administrator and will be applied to reduce future
Employer Contributions due under the Plan. The Trustee will promptly advise the
Employers of any such forfeiture and the amount thereof.

                                                                              40


                                    ARTICLE V

                          THE TRUST FUND - INVESTMENTS

     5.01    TRUST AGREEMENT

     Contributions are held in a Trust Fund by the Trustee under a written trust
agreement between CECONY and the Trustee. TRASOP Accounts are held in a TRASOP
Trust Fund under a written trust agreement between CECONY and the Trustee. ESOP
Accounts are held in the ESOP Trust Fund which is included in, but a separate
part of the Trust Fund. No person has any rights to or interest in the Trust
Fund except as provided in the Plan. The provisions of the trust agreement
between CECONY and the Trustee shall be considered an integral part of the Plan
as if fully set forth herein.

     5.02    INVESTMENT OF TRUST FUND

     (a)     The Trust Fund shall be invested and reinvested in Investment Funds
in accordance with the Participant's investment directions. The Plan is intended
to be an ERISA Section 404(c) plan within the meaning of regulations issued
pursuant to such section. Each Participant shall have the opportunity, on a
daily basis, to give investment instructions to the Trustee, or other fiduciary
who is appointed and assumes such fiduciary responsibility, with an opportunity
to obtain written confirmation of such instructions as to his or her existing
Account Balance among the Investment Funds. The Plan Administrator, the Trustee
and the Record keeper or their delegate, will comply with such instructions
except as otherwise provided in the ERISA Section 404(c) regulations. The Plan
Administrator will prescribe the form and manner in which such directions will
be made, as well as the frequency with which such directions may be made or
changed, and the dates as of which they will be effective, in a manner
consistent with the foregoing. Transfers to or

                                                                              41


from an Investment Fund may be restricted or limited by the manager of such
Investment Fund or by the terms of the Trust Agreement.

     (b)     The Named Fiduciaries shall select a range of Investment Funds as
described by ERISA Section 404(c) and applicable regulations. The Investment
Fund categories shall give each Participant a reasonable opportunity to:

             (i)    Materially affect the potential return on and the degree of
                    risk of assets over which the Participant exercises
                    investment control;

             (ii)   Choose from at least three investment alternatives, each of
                    which is diversified and has materially different risk and
                    return characteristics;

             (iii)  Enable a Participant to achieve a portfolio with risk and
                    return characteristics at any point within the range
                    normally appropriate by choosing among the core
                    alternatives; and

             (iv)   Diversify investments so as to minimize the risk of large
                    losses.

     (c)     The Named Fiduciaries may establish new Investment Funds without
the necessity of an amendment to the Plan and shall have the objectives
prescribed by the Named Fiduciaries. The Named Fiduciaries may eliminate one or
more Investment Fund existing at any time without the necessity of an amendment
to the Plan. The Named Fiduciaries may establish rules and procedures governing
the transfer of portions of Participant's Account Balance in the event that
existing Investment Funds are changed or new Investment Funds added. The Named
Fiduciaries may appoint an Investment Manager to manage an Investment Fund.

     5.03    COMPANY STOCK FUND

     For Plan Years beginning before January 1, 2002 and for Plan Year 2002
until May 8, 2002, all funds invested in the Company Stock Fund, are invested as
a Participant's

                                                                              42


Employer Contributions Subaccount, and subject to this Section 5.03(a), (b) and
(c). Effective as of the ESOP Effective Date, a Participant who invests some,
all, or any part of his or her Employer Contributions in the Company Stock Fund
will be an ESOP Participant subject to Article XIV.

     (a)     INVESTMENTS IN FUND The Trustee shall regularly purchase Shares for
the Company Stock Fund in accordance with a non-discretionary purchasing
program. Such purchases may be made on any securities exchange where Shares are
traded, in the over-the-counter market, or in negotiated transactions, and may
be on such terms as to price, delivery and otherwise as the Trustee may
determine to be in the best interests of the Participants. Dividends, interest
and other income received on assets held in the Company Stock Fund shall be
reinvested in the Company Stock Fund. All funds to be invested in the Company
Stock Fund shall be invested by the Trustee in one or more transactions promptly
after receipt by the Trustee, subject to any applicable requirement of law
affecting the timing or manner of such transactions. All brokerage commissions
and other direct expenses incurred by the Trustee in the purchase or sale of
Shares under the Plan will be borne by the Account investing and/or trading in
the Company Stock Fund.

     (b)     UNITS The interests of Participants in the Company Stock Fund shall
be measured in Units, the number and value of which shall be determined daily.

     (c)     VOTING OF SHARES Each Participant shall be entitled to direct the
Trustee as to the manner in which any Shares or fractional Share allocated to
the Participant's Account Balance are to be voted. Any such Shares or fractional
Share for which the Participant does not give voting directions shall be voted
by the Trustee in the same manner and proportions as all other Shares held by
the Trustee for which voting directions are given by Participants.

                                                                              43


The Trustee shall keep confidential a Participant's voting instructions and
information regarding a Participant's purchases, holdings and sales of Shares.
The Plan Administrator shall be responsible for monitoring the Trustee's
performance of its confidentiality obligations.

     5.04    ACCOUNTS AND SUBACCOUNTS

     The Recordkeeper will maintain a daily evaluation at current market values,
as determined by the Trustee. The Recordkeeper will also maintain a separate
TRASOP Account for each eligible Participant and a separate Account Balance for
each Participant, and within each such Account Balance, as applicable, a Pre-Tax
Contributions Subaccount, an After-Tax Contributions Subaccount, a Rollover
Contributions Subaccount, an ESOP Account and an Employer Contributions
Subaccount. The Recordkeeper will keep a separate record of the respective
amounts of each Participant in the Trust Fund, including each Investment Fund
and the Loan Reserve, attributable to amounts credited to a Participant's
Pre-Tax Contributions Subaccount, After-Tax Contributions Subaccount, Rollover
Contributions Subaccount, ESOP Account, and Employer Contributions Subaccount.

     5.05    STATEMENTS OF ACCOUNT

     As soon as practicable after each calendar quarter, the Recordkeeper will
cause to be sent to each Participant a written statement showing, as of such
date, the respective amounts of the Participant's Account Balance, including
each Investment Fund and the Loan Reserve, attributable to the Participant's
Pre-Tax Contributions Subaccount, After-Tax Contributions Subaccount, Rollover
Contributions Subaccount, Employer Contributions Subaccount and TRASOP Account,
if any. With respect to the Participant's After-Tax Contributions Subaccount,
the statement will show separately the amount of the Participant's own
contributions (less any withdrawal) credited to his or her After-Tax Subaccount.
The Plan

                                                                              44


Administrator may direct the Recordkeeper from time to time to issue comparable
statements to Participants as of other dates during the calendar year.

     5.06    RESPONSIBILITY FOR INVESTMENT

     Each Participant is solely responsible for the selection of his or her
Investment Funds. The Trustee, the Recordkeeper, any Investment Manager, the
Named Fiduciaries, the Plan Administrator, the Company, each Employer and the
trustees, officers and other Employees of each entity are not empowered to
advise a Participant as to the decision in which his or her Account Balance is
invested. The fact that an Investment Fund is available to Participants for
investment under the Plan is not to be construed as a recommendation for a
particular Participant to invest in the Investment Fund.

                                                                              45


                                   ARTICLE VI

                                     VESTING

     6.01    PARTICIPANT CONTRIBUTIONS

     The amount to the credit of a Participant's Account Balance attributable to
his or her Pre-Tax Contributions, After-Tax Contributions, Rollover
Contributions and TRASOP Account is 100% vested at all times.

     6.02    EMPLOYER CONTRIBUTIONS

     (a)     CECONY WEEKLY PARTICIPANT The amount to the credit of a CECONY
Weekly Participant's Account Balance attributable to Employer Contributions,
including those allocated to his or her ESOP Account, if applicable, made with
respect to any Payroll Period ending in a calendar year (the Contribution Year)
shall become 100% vested, subject to Article 8, on the earlier of the last day
of the third calendar year following the close of the Contribution Year or the
first day of the month in which the CECONY Weekly Participant completes five
Years of Service. Once a CECONY Weekly Participant completes five years of
Vesting Service, each Employer Contribution made on behalf of the CECONY Weekly
Participant becomes 100% vested. Effective January 1, 2002, each CECONY Weekly
Participant shall be 100% fully vested on the first day of the month in which he
or she completes three Years of Vesting service. All amounts to the credit of a
CECONY Weekly Participant's Account Balance attributable to Employer
Contributions, including those allocated to his or her ESOP Account, not yet
vested will become 100% vested upon attainment of age 65, death, Disability,
Retirement or termination of employment by the

                                                                              46


Company for reasons other than cause. Employer Contributions not yet vested are
subject to forfeiture as provided in Section 7.01.

     (b)     CECONY MANAGEMENT OR CEI PARTICIPANT The amount to the credit of a
CECONY Management or CEI Participant's Account Balance attributable to Employer
Contributions, including those allocated to his or her ESOP Account, if
applicable, shall become 100% vested, subject to Article 8, on the first day of
the calendar month in which the CECONY Management or CEI Participant completes
three years of Vesting Service. Once a CECONY Management or CEI Participant
completes three years of Vesting Service, each Employer Contribution made on
behalf of the CECONY Management Participant or CEI shall be 100% vested. All
amounts to the credit of a CECONY Management or CEI Participant's Account
Balance attributable to Employer Contributions, including those allocated to his
or her ESOP Account, if applicable, not yet vested will become 100% vested upon
attainment of age 65, Disability, death, retirement or termination of employment
by the Company for reasons other than cause. Employer Contributions otherwise
are subject to forfeiture as provided in Section 7.01.

     (c)     O&R HOURLY PARTICIPANT An O&R Hourly Participant's Account Balance
is 100% vested at all times.

     (d)     O&R MANAGEMENT PARTICIPANT An O&R Management Participant's Account
Balance is 100% vested at all times. 6.03 SPECIAL VESTING RULES

     (a)     Each person employed at the electric power generating facilities
purchased from Western Massachusetts Electric Company ("WMECO Facilities") on
July 19, 1999, the date of the Closing of the purchase of the WMECO Facilities
by a CEI Affiliate, was 100% vested as of July 19, 1999, in his or her Account
Balance.

                                                                              47


     (b)     Each CECONY Participant at the fossil-fueled electricity generating
facilities in New York City or at the nuclear-fueled electricity generating
facilities at Indian Point divested by CECONY ("Divested Operations") who became
employed by the respective buyers of the Divested Operations were 100% vested as
of the Date of the Closing of each Divested Operation.

     (c)     Each person employed at the natural gas fueled electricity
generating facility known as the Lakewood Cogeneration Facility ("Lakewood
Plant") purchased by a CEI Affiliate and who became an Employee of such CEI
Affiliate, was 100% vested in his or her Account Balance as of June 1, 2000.

                                                                              48


                                   ARTICLE VII

                   DISTRIBUTIONS, WITHDRAWALS AND FORFEITURES

     7.01    VOLUNTARY TERMINATION OR TERMINATION BY THE COMPANY - FORFEITURES

     (a)     If a CECONY or CEI Participant's service is terminated by the
Company for cause or if the CECONY or CEI Participant voluntarily terminates his
or her service other than by reason of Retirement, at on or after attainment of
age 65, or Disability the non-vested portion of the CECONY or CEI Participant's
Employer Contributions Subaccount and ESOP Account shall not be forfeited until
the CECONY or CEI Participant incurs a five-year Break in Service. The vested
portion of such CECONY or CEI Participant's Account Balance (including any
amount due under any outstanding loan pursuant to Article 9) will be distributed
to such CECONY or CEI Participant in accordance with Section 7.08. Termination
of service for cause shall be determined by the Plan Administrator under rules
uniformly applied to all CECONY or CEI Participants. If the CECONY Participant
is not reemployed by the Company or an Affiliate before he or she incurs five
one-year Breaks in Service or receives a distribution, the non-vested portion of
his or her Employer Contributions Subaccount and ESOP Account will then be
forfeited.

     (b)     If an amount to the credit of a Participant's Employer
Contributions Subaccount and ESOP Account has been forfeited in accordance with
paragraph (a) above, such amount shall subsequently be restored to his or her
Employer Contributions Subaccount and ESOP Account by the Company provided;
however, that within five years after his or her reemployment date if he or she
makes a lump sum payment to the Trust Fund in cash in an amount equal to that
portion of the distribution received which represents the Participant's

                                                                              49


Participating Contributions relating directly to Employer Contributions which
were forfeited at the time of distribution. The amount restored will vest in
accordance with Section 6.02 as an Employer Contribution and shall be credited
to the Participant's Employer Contributions Subaccount and ESOP Account. The
lump sum payment by the Participant is immediately 100% vested and will be
credited to the Participant's Account Balance and ESOP Account.

     (c)     If any amounts to be restored to a Participant's Employer
Contributions Subaccount and ESOP Account have been forfeited under paragraph
(a) above, those amounts will be taken first from any forfeitures which have not
as yet been applied against Employer Contributions and if any amounts remain to
be restored, the Employer will make a special Employer Contribution equal to
those amounts.

     (d)     A Participant shall elect how to invest the repayment at the time
of the repayment.

     7.02    DEATH

     Upon the death of a Participant, the entire amount to the credit of his or
her Account Balance (including any amount due under any outstanding loan
pursuant to Article 9) will be distributed to his or her Beneficiary in
accordance with Section 11.03 as soon as practicable after the calendar month in
which his or her death occurs.

     7.03    WITHDRAWALS

     (a)     A CECONY OR CEI PARTICIPANT may request an in-service cash
withdrawal from his or her vested Account Balance of amounts other than Pre-Tax
Contributions, by making a withdrawal application in such manner and on such
conditions as may be prescribed by the Plan Administrator. In-service
withdrawals of Pre-Tax Contributions are restricted, as described herein.
Payment of the amount withdrawn will be made as soon as practicable after such
application has been completed and processed. Withdrawal requests

                                                                              50


by CECONY or CEI Participants are permitted up to four times in any calendar
year and only in accordance with the following terms: Withdrawals will be made
on an average cost basis within each category below and pro rata from the CECONY
or CEI Participant's Account Balance available for withdrawal. A CECONY or CEI
Participant may at any time withdraw an amount up to the entire vested amount to
the credit of his or her After-Tax and Employer Contribution Subaccounts, and
ESOP Account except that a CECONY Weekly Participant may not withdraw an amount
attributable to an Employer Contribution until December 31st, of the third
calendar year - and a CECONY Management Participant or CEI Participant, of the
second calendar year -- beginning after the calendar month for which the
Employer Contribution was made. A CECONY or CEI Participant will not be
permitted to make any such withdrawal amounting to less than $300 unless the
maximum amount available under this paragraph is less than $300 in which case
the CECONY or CEI Participant will only be permitted to withdraw such maximum
amount. Withdrawals will be made in the following order from a CECONY or CEI
Participant's Account Balance:

        (1)  If the CECONY or CEI Participant requests a nontaxable withdrawal:

             (i)    Non-Participating After-Tax Contributions made before
                    January 1, 1987, excluding any earnings thereon, and

             (ii)   Participating After-Tax Contributions made before January 1,
                    1987, excluding any earnings thereon.

        (2)  If the CECONY or CEI Participant requests a taxable withdrawal,
             without incurring a suspension as provided below:

             (i)    Non-Participating After-Tax Contributions made before
                    January 1, 1987, excluding any earnings thereon;

                                                                              51


             (ii)   Participating After-Tax Contributions made before January 1,
                    1987, excluding any earnings thereon;

             (iii)  Non-Participating After-Tax Contributions made on or after
                    January 1, 1987, including any earnings thereon;

             (iv)   Participating After-Tax Contributions made on or after
                    January 1, 1987, that have been in the Account for two full
                    calendar years after the year contributed for a CECONY
                    Management or CEI Participant and three full calendar years
                    after the year contributed for a CECONY Weekly Participant,
                    including any earnings thereon;
             (v)    Any earnings attributable to Non-Participating After-Tax
                    Contributions made before January 1, 1987;

             (vi)   Any earnings attributable to Participating After-Tax
                    Contributions made before January 1, 1987; and

             (vii)  Employer Contributions that have not been in the CECONY
                    Weekly Participant's Account for three, or in a CECONY
                    Management or CEI Participant's Account for two, full
                    calendar years after the contribution year, including any
                    earnings thereon.

        (3)  If the CECONY or CEI Participant requests a taxable withdrawal
             resulting in a suspension as provided below:

             (i)    Non-Participating After-Tax Contributions made before
                    January 1, 1987, excluding any earnings thereon;

             (ii)   Participating After-Tax Contributions made before January 1,
                    1987, excluding any earnings thereon;

                                                                              52


             (iii)  Non-Participating After-Tax Contributions made on or after
                    January 1, 1987, including any earnings thereon;

             (iv)   Participating After-Tax Contributions made on or after
                    January 1, 1987, including any earnings thereon;

             (v)    Any earnings attributable to Non-Participating After-Tax
                    Contributions made before January 1, 1987;

             (vi)   Any earnings attributable to Participating After-Tax
                    Contributions made before January 1, 1987; and

             (vii)  Employer Contributions that have not been in the Account for
                    three full calendar years for a CECONY Weekly Participant
                    and two full calendar years for a CECONY Management or CEI
                    Participant, after the contribution year, including any
                    earnings thereon.

     A CECONY or CEI Participant who has withdrawn at least the entire amount
available in his or her After-Tax, Employer Contribution Subaccount and ESOP
Account without incurring a suspension may at any time withdraw an amount up to
the entire amount to the credit of his or her Rollover Contribution Subaccount.

     A CECONY or CEI Participant who has attained the age of fifty-nine and
one-half and who has withdrawn at least the entire vested amount available for
withdrawal in his or her After-Tax Contribution Subaccount, Employer
Contribution Subaccount, ESOP Account and Rollover Contribution Subaccount
without incurring a suspension, may withdraw an amount up to the entire amount
to the credit of his or her Pre-tax Contribution Subaccount in the following
order:

                                                                              53


        (4)  If the CECONY or CEI Participant requests a withdrawal, without
             resulting in a suspension:

             (i)    Non-Participating Pre-Tax Contributions, including any
                    earnings thereon, and

             (ii)   Participating Pre-Tax Contributions that have been in the
                    Account for three full calendar years for a CECONY Weekly
                    Participant and two full calendar years for a CECONY or CEI
                    Management Participant after the year contributed, including
                    any earnings thereon.

        (5)  If the CECONY or CEI Participant requests a withdrawal resulting
             in a suspension:

             (i)    Participating After-Tax Contributions, made on or after
                    January 1, 1987 that have been in the Account for less than
                    three full calendar years for a CECONY Weekly Participant
                    and two full calendar years for a CECONY or CEI Management
                    Participant after the contribution year, including any

                    earning thereon;
             (ii)   Non-Participating Pre-Tax Contributions, including any
                    earnings thereon; and

             (iii)  Participating Pre-Tax Contributions including any earnings
                    thereon.

     A CECONY or CEI Participant shall not be permitted to make any such
withdrawal amounting to less than $300 unless the maximum amount available is
less than $300 in which case the CECONY or CEI Participant shall only be
permitted to withdraw such maximum amount.

                                                                              54


     Notwithstanding the preceding subparagraphs, a CECONY or CEI Participant
may not withdraw any amount that would cause his or her Account Balance to be
less than the minimum amount required under Section 9.12.

     In the event a CECONY or CEI Participant withdraws any amounts which
represent After-Tax Participating Contributions made at any time during the
three full calendar years for a CECONY Weekly Participant and two full calendar
years for a CECONY or CEI Management Participant, preceding the calendar year in
which the withdrawal is made, the CECONY or CEI Participant's right to make any
contributions to the Plan shall be suspended throughout all Payroll Periods
commencing during the six full calendar months as soon as practicable following
the withdrawal. To resume contributions following such suspension, the CECONY or
CEI Participant must elect on or before such day, in such manner and on such
conditions as may be prescribed by the Plan Administrator, to resume making
contributions.

     (b)     AN O&R HOURLY PARTICIPANT who has attained the age of fifty-nine
and one-half may request an in-service cash withdrawal. He or she may withdraw
all or a portion of his or her Account Balance attributable to Pre-Tax
Contributions and Rollover Contributions and income credited thereon (other than
any portion of his or her Account Balance attributable to an outstanding loan
balance), except that he or she may not withdraw such amount to the extent that
under applicable state law such contributions and/or earnings, whether or not
withdrawn, would be subject to state income tax if such O&R Hourly Participant
had the right to withdraw it from his or her Account Balance. Such request may
be made only once each twelve-month period and may not be for an amount of less
than $500 or the entire amount available for withdrawal. Effective January 1,
2002, withdrawals

                                                                              55


may be made up to four times in a year and the minimum amount that may be
withdrawn is reduced to $300.

     (c)     AN O&R MANAGEMENT PARTICIPANT may request a withdrawal from his or
her Account Balance which is attributable to After-Tax Contributions in such
manner and on such conditions as may be prescribed by the Plan Administrator.
Additionally, an O&R Management Participant who is at least age fifty-nine and
one-half may withdraw during employment all or a portion of his or her Account
Balance which is attributable to Pre-Tax Contributions and Rollover
Contributions and income credited thereon (except for any portion of his or her
Account Balance attributable to an outstanding loan balance), except that he or
she may not withdraw such amount to the extent that under applicable state law
such contributions and/or earnings, whether or not withdrawn, would be subject
to state income tax if such O&R Management Participant had the right to withdraw
it from his or her Account Balance. Such requests may be made only once each
twelve month period and may not be for an amount of less than $500 or the entire
amount available for withdrawal. Effective January 1, 2002, withdrawals, when
available, may be made up to four times in a year and the minimum amount that
may be withdrawn is reduced to $300.

     7.04    HARDSHIP WITHDRAWALS

     A Participant may, in the event of hardship, withdraw all or any part of
the amount of Pre-Tax Contributions to the credit of the Account Balance of the
Participant (excluding any earnings after December 31, 1998, attributable to
Pre-Tax Contributions) in excess of any minimum Account Balance required under
Section 9.09. An O&R Participant may also withdraw the income credited after
December 31, 1988, attributable to Transferred Employer PAYSOP Contributions and
Rollover Contributions and income attributable to After-Tax Contributions if
such income is subject to the restrictions on withdrawal pursuant to Section

                                                                              56


7.03. A Participant may apply for a hardship withdrawal in such manner and on
such conditions as may be prescribed by the Plan Administrator. A Participant
shall be deemed to have a hardship if the Participant has an immediate and heavy
financial need and if the withdrawal is necessary to satisfy such financial need
as set forth below. The Plan Administrator or his or her delegate shall
determine whether the Participant satisfies the requirements for a hardship and
the amount of any hardship withdrawal. Any withdrawal under this Section shall
be made pro-rata from the Participant's balances in the Investment Funds from
which withdrawal may be made as provided in Section 7.03. A withdrawal pursuant
to this Section 7.04 shall not be subject to the limitations on number of
withdrawals permitted under Section 7.03.

     (a)     IMMEDIATE AND HEAVY FINANCIAL NEED. A Participant will be deemed to
have an immediate and heavy financial need if the withdrawal is to made on
account of any of the following:

        (1)  Medical expenses described in Code Section 213(d) previously
             incurred by the Participant, the Participant's spouse or any
             dependent, (as defined in Code Section 152), of the Participant,
             or expenses necessary for those persons to obtain medical care
             described in Code Section 213(d);

        (2)  Costs directly related to the purchase, excluding mortgage
             payments, of a principal residence for the Participant;

        (3)  Payment of tuition, related educational fees, and room and board
             expenses for the next twelve-months of post- secondary
             education for the Participant, or the Participant's spouse,
             children or dependents;

                                                                              57


        (4)  Payment of amounts necessary to prevent the eviction of the
             Participant from his or her principal residence or to avoid
             foreclosure on the mortgage of the Participant's principal
             residence;

        (5)  Payment of funeral expenses for a family member;

        (6)  Any other need added to the foregoing items of deemed immediate
             and heavy financial needs by the Commissioner of the Internal
             Revenue Service through the publication of revenue rulings,
             notices and other documents of general availability, rather than
             on an individual basis.

        (7)  A Participant shall not be permitted to make a withdrawal in the
             event of a hardship on account of any reason other than as set
             forth above.

     (b)     NECESSARY TO SATISFY SUCH NEED. The requested withdrawal will not
be treated as necessary to satisfy the Participant's immediate and heavy
financial need to the extent that the amount of the requested withdrawal is in
excess of the amount required to relieve the financial need or to the extent
such need may be satisfied from other sources that are reasonably available to
the Participant. The amount of an immediate and heavy financial need may include
any amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the hardship withdrawal. The
Participant must request, on such form or otherwise as the Plan Administrator or
his or her delegate may prescribe, that the Plan Administrator or his or her
delegate made its determination of the necessity for the withdrawal solely on
the basis of the Participant/s certification, without any supporting documents.
In the event the Plan Administrator or his or her delegate shall make such
determination provided all of the following requirements are met: (1) the
Participant has obtained all distributions and withdrawals, other than
distributions available only on account

                                                                              58


of hardship, and all nontaxable loans currently available under all plans of the
Company and Affiliates, (2) the Participant is prohibited from making Pre-Tax
Contributions and After-Tax Contributions to the Plan and all other plans of the
Company and Affiliates under the terms of such plans or by means of an otherwise
legally enforceable agreement for at least 12 months, or beginning on or after
January 1, 2002, six months, after receipt of the distribution, and (3) the
limitation described in Section 3.02 under all plans of the Company and
Affiliates for the calendar year following the year in which the distribution is
made must be reduced by the Participant's Pre-Tax Contributions made prior to
such distribution in the calendar year of the distribution for hardship. All
other plans of the Company and Affiliates means all qualified and non-qualified
plans of deferred compensation maintained by the Company and Affiliates and
includes a stock option, stock purchase (including the Company's Discount Stock
Purchase Plan), qualified and non-qualified deferred compensation plans and such
other plans as may be designated under regulations issued under Code Section
401(k), but shall not include health and welfare benefit plans.

     7.05    DISTRIBUTION FROM COMPANY STOCK FUND

     Where an amount to be distributed pursuant to Section 7.02, 7.03 or 14.10
is represented in part by Units, the distributee may elect, in such manner and
on such conditions as may be prescribed by the Plan Administrator, to have
distributed the number of whole Shares represented by such Units, together with
an amount of dollars representing the balance of the current value of such
Units. In the absence of such an election, the distribution shall be made
entirely in cash. Withdrawals for hardships or loans to be made from the Company
Stock Fund shall be made entirely in cash.

     7.06    LEAVES OF ABSENCE

                                                                              59


     If a Participant is granted an unpaid leave of absence by an Employer, such
event will not be deemed a termination of service, but such Participant's
Pre-Tax Contributions and After-Tax Contributions under this Plan will be
suspended as of the last day of the Payroll Period in which such leave
commences. Such Participant may resume making Pre-Tax Contributions and
After-Tax Contributions, as of a Payroll Period following the termination of
such leave of absence, by making a new payroll deduction authorization in such
manner and on such conditions as may be prescribed by the Plan Administrator.
Notwithstanding the preceding sentence, and the provisions of Section 7.04, if a
Participant makes a hardship withdrawal while on a leave of absence, any
suspension of such Participant's right to make Pre-Tax or After-Tax
Contributions which shall result from such withdrawal shall begin with the first
Payroll Period beginning after such leave of absence.

     7.07    AGE 70 1/2 REQUIRED DISTRIBUTION

     (a)     A Participant who attains age 70 1/2 on or after January 1, 2000,
shall begin his or her distribution of his or her Account Balance no later than
the April 1st following the later of the calendar year in which he or she
attains age 70 1/2 or the calendar year in which the Participant terminates
employment.

     (b)     In the event a Participant in active service was required prior to
January 1, 2000 to begin receiving payments while in service under the
provisions of a Prior Plan, the Plan shall distribute to the Participant in each
distribution calendar year the minimum amount required to satisfy the provisions
of Code Section 401(a)(9) provided; however, that the payment for the first
distribution calendar year shall be made on or before April 1 of the following
calendar year. Such minimum amount will be determined on the basis of the joint
life expectancy of the Participant and his or her Beneficiary. Such life
expectancy will be recalculated once each year; however, the life expectancy of
the Beneficiary will not be

                                                                              60


recalculated if the Beneficiary is not the Participant's spouse. The amount of
the withdrawal shall be allocated among the Investment Funds in proportion to
the value of the Account Balance as of the date of each withdrawal. The
commencement of payments under this Section shall not constitute an Annuity
Starting Date for purposes of Code Sections 72, 401(a)(11) and 417. Upon the
Participant's subsequent termination of employment, payment of the Participant's
Account Balance shall be made in accordance with the provisions of Section 7.08.

     (c)     With respect to distributions under the Plan made in calendar years
beginning on or after January 1, 2000, the Plan will apply the minimum
distribution requirements of Code Section 401(a)(9) that were proposed in
January 2001, notwithstanding any provision of the Plan to the contrary. This
amendment shall continue in effect until the end of the last calendar year
beginning before the effective date of final regulations under Code Section
401(a)(9) or such other date specified in guidance published by the Internal
Revenue Service.

     7.08    FORM AND TIMING OF DISTRIBUTIONS

     (a)     TIMING OF DISTRIBUTIONS. Upon termination from employment with the
Company and any Affiliate service, distributions will be made as follows:

        (1)  if the vested portion of the Participant's Account Balance equals
             $5000 or less, his or her Account Balance will be distributed in a
             single lump sum as soon as practicable but not later than 60 days
             after the end of the calendar year in which the Participant's
             termination from employment occurs; or

        (2)  unless the Participant consents to a distribution upon termination
             from employment, if the vested portion of the Participant's Account
             Balance exceeds $5000, distribution will be deferred until April 1
             of the calendar year

                                                                              61


             following the calendar year in which the Participant attains age
             70 1/2 unless, and until, the Participant elects an earlier
             distribution under Section 7.08(b).

        (3)  Termination of employment entitling a Participant to a distribution
             does not occur in the event of a corporate transaction in which
             there is a transfer of the Account Balances of Participants
             affected by the corporate transaction to a plan maintained or
             created by the affected Participant's new employer.

     (b)     The Participant may elect an immediate or deferred distribution,
subject to Code Section 401 (a)(9), Article XIV, if applicable, and, in such
manner and on such conditions as may be prescribed by the Plan Administrator,
any of the following:

        (1)  a distribution of the Participant's Vested Account Balance in a
             single lump sum;

        (2)  monthly, quarterly or annual periodic installment payments in a
             fixed dollar amount or fixed percentage amount, up to a 15-year
             period; or

        (3)  a distribution of all or part of the Participant's Vested Account
             Balance.

     (c)     If a Participant's distribution is deferred until April 1 of the
calendar year following the calendar year in which the Participant attains again
70 1/2, the Participant may elect, in such manner and on such conditions as may
be presented by the Plan administrator;

        (1)  a distribution in a single lump sum, or

        (2)  a distribution in the required minimum amounts and over the
             applicable distribution period prescribed under the Code's minimum
             distribution rules. If the Participant fails to make an election,
             the distribution shall be made in a single lump sum;

                                                                              62


     (d)     Any distribution of less than all of a Participant's Vested Account
Balance shall be made pro-rata from the Investment Funds in which the Account
Balance in invested.

     7.09    PROOF OF DEATH AND RIGHT OF BENEFICIARY OR OTHER PERSON

     The Plan Administrator may require and rely upon such proof of death and
such evidence of the right of any Beneficiary or other person to receive the
value of the vested Account Balance of a deceased Participant as the Plan
Administrator may deem proper, and his or her determination of the right of that
Beneficiary or other person to receive payment will be conclusive.

     7.10    DISTRIBUTION LIMITATION

     Notwithstanding any other provision of this Article 7, all distributions
from this Plan shall conform to the regulations issued under Code Section
401(a)(9), including the incidental death benefit provisions of Code Section
401(a)(9)(G). Such regulations override any Plan provision that is inconsistent
with Code Section 401(a)(9).

     7.11    DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS

     Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, a Distributee may
elect, in such manner and on such conditions as may be prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a direct
rollover. The following definitions apply to the terms used in this Section:

     (a)     ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any
portion of the balance to the credit of the Distributee. An Eligible Rollover
Distribution does not include any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the

                                                                              63


joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten years or
more or any distribution to the extent such distribution is required under Code
Section 401(a)(9). Any amount that is distributed on account of hardship is not
an Eligible Rollover Distribution. The Distributee may not elect to have any
portion of a hardship distribution paid directly to an Eligible Retirement Plan.
Effective beginning January 1, 2002, a distribution does not fail to be an
Eligible Rollover Distribution solely because it includes after-tax employee
contributions that are not includible in gross income. The portion attributable
to after-tax contributions may be transferred only to an individual retirement
account or annuity described in Code Section 408(a) or (b), or to a qualified
defined contribution plan described in Code Section 401(a) or 403(a) that agrees
to separately account for amounts so transferred, including separately
accounting for the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so includible.

     (b)     ELIGIBLE RETIREMENT PLAN means an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a) that is a defined contribution
plan, that accepts the Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity. Effective January 1, 2002, Eligible Retirement Plan also
means an annuity plan described in Code Section 403(b), and an eligible plan
under Code Section 457(b) maintained by a political subdivision of a state, or
any agency or instrumentality of a state or political subdivision of a state and
which agrees to separately account for amounts

                                                                              64


transferred into such plan from this Plan, including separately accounting for
the portion of such distribution that is includible in gross income and the
portion of such distribution that is not so includible.

     (c)     DISTRIBUTEE means an Employee, former employee, the surviving
spouse of the Employee or Former Employee, spouse or former spouse of an
Employee or Former Employee who is the alternate payee under a qualified
domestic relations order as defined in Code Section 414(p), are Distributees.

     (d)     DIRECT ROLLOVER means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.

                                                                              65


                                  ARTICLE VIII

                        NON-DISCRIMINATION AND LIMITATION

     8.01    ACTUAL DEFERRAL PERCENTAGE TEST

     (a)     Separate Testing Groups. Solely for purposes of determining whether
the Plan satisfies the Average Actual Deferral Percentage tests, the Plan will
be tested as if it were four separate plans ("Testing Plan"): (1) a Plan
covering CECONY Management Employees, O&R Management Employees and CEI Employees
("Management Employees"), (2) a Testing Plan covering O&R Hourly
Employees ("O&RU"), (3) a plan covering Local 1-2 Employees ("Local 1-2U") and,
(4) a plan covering Local 3 Employees ("Local 3U"). Each employee in the O&RU,
Local 1-2U, and Local 3U is referred to as a "Union Employee." Solely for
purposes of determining whether a Testing Plan satisfies the Actual Deferral
Percentage Test, an Employee who is under age 21 or has less than one Year of
Service is not taken into account as an Eligible Employee.

     (b)     The Average Actual Deferral Percentage for both Highly Compensated
Management Employees ("HCMEs") and for Highly Compensated Union Employees
("HCUEs"), respectively, who are, or are eligible to become, Participants may
not exceed the greater of:

             (i)    the Average Actual Deferral Percentage for Non-Highly
                    Compensated Management Employees ("NHCMEs") or Non-Highly
                    Compensation Union Employees ("NHCUEs"), respectively, who
                    are, or eligible to become, Participants multiplied by 1.25;
                    or
             (ii)   the Average Actual Deferral Percentage for HCMEs or HCUEs,
                    respectively, multiplied by 2.0, but not more than 2
                    percentage points in

                                                                              66


                    excess of the Average Actual Deferral Percentage for the
                    NHCMEs or NHCUEs, respectively.

     (c)     During a Plan Year, the Plan Administrator may implement rules
limiting the Pre-Tax Contributions which may be made on behalf of some or all of
either the HCMEs or HCUEs so that this limitation is satisfied. If the Plan
Administrator determines that the limitation has been exceeded in any Plan Year,
the following provisions apply:

        (1)  The amount of Pre-Tax Contributions made by either the HCMEs or
             HCUEs, as applicable, will be reduced by a leveling process under
             which the Pre-Tax Contributions of the HCME or HCUE, as applicable,
             with the highest dollar amount of Pre-Tax Contributions shall be
             reduced to the extent necessary to completely eliminate the excess
             Pre-Tax Contribution or cause such Pre-Tax Contributions to equal
             the amount of such contributions of the HCME or HCUE, as
             applicable, with the next highest dollar amount of Pre-Tax
             Contribution. This process will be repeated until the excess
             Pre-Tax Contribution is eliminated.

        (2)  Excess Pre-Tax Contributions, together with Earnings, will be paid
             to the Participant before the close of the Plan Year following the
             Plan Year in which the excess Pre-Tax Contributions were made and,
             to the extent practicable, within 2 1/2 months of the close of the
             Plan Year in which the Excess Pre-Tax Contributions were made.
             However, any Excess Pre-Tax Contributions for any Plan Year will be
             reduced by any Pre-Tax Contributions previously returned to the
             Participant for that Plan Year. If any returned Excess Pre-Tax
             Contributions were matched by Employer Contributions, such
             corresponding

                                                                              67


             Employer Contributions, with Earnings will be forfeited and used to
             reduce Employer Contributions. The Participant, other than an O&R
             HCUE, may elect, in lieu of a return of the Excess Pre-Tax
             Contributions to have the Plan treat all or a portion of the Excess
             Pre-Tax Contributions to the Plan as After-Tax Contributions for
             the Plan Year in which the Excess Pre-Tax Contributions were made,
             subject to the limitations of Section 3.01. Re-characterized Excess
             Pre-Tax Contributions shall be considered After-Tax Contributions
             made in the Plan Year to which the Excess Pre-Tax Contributions
             relate for purposes of Section 8.02 and shall be subject to the
             withdrawal provisions applicable to After-Tax Contributions under
             Article 7. The Participant's election to re-characterize Excess
             Pre-Tax Contributions shall be made within 21/2months of the close
             of the Plan Year in which the Excess Pre-Tax Contributions were
             made or within such shorter period as the Plan Administrator may
             prescribe. In the absence of a timely election by the Participant,
             the Plan shall return Excess Pre-Tax Contributions.

     8.02    ACTUAL CONTRIBUTION PERCENTAGE TEST

     (a)     Solely for purposes of determining whether the Plan satisfies the
Average Contribution Percentage test, the Plan will not test Union Employees.
The Plan will test only the Management Employees.

     (b)     The Average Contribution Percentage for HCMEs who are, or eligible
to become, Participants may not exceed the Average Contribution Percentage of
NHCMEs who are, or are eligible to become, Participants multiplied by 1.25. If
the Average Contribution Percentage for the HCMEs does not meet the foregoing
test, the Average Contribution Percentage for HCMEs may not exceed the Average
Actual Contribution Percentage of

                                                                              68


NHCMEs who are, or eligible to become, Participants by more than two percentage
points, and the Average Contribution Percentage for HCMEs may not be more than
2.0 times the Average Contribution Percentage for NHCMEs (or such lesser amount
as the Plan Administrator shall determine to satisfy the provisions of Section
8.03). During a Plan Year, the Plan Administrator may implement rules limiting
the After-Tax Contributions which may be made by some or all HCMEs so that this
limitation is satisfied. If the Plan Administrator determines that the
limitation under this Section 8.02 has been exceeded in any Plan Year, the
following provisions shall apply:

        (1)  The amount of After-Tax Contributions and Employer Contributions
             made by or on behalf of some or all HCMEs in the Plan Year shall be
             reduced in the same leveling manner as Excess Pre-Tax Contributions
             are reduced.

        (2)  Any Excess Aggregate Contributions will be reduced and allocated in
             the following order:

             (i)    Non-Participating After-Tax Contributions, to the extent of
                    the Excess Aggregate Contributions, will be paid to the
                    Participant; and then, if necessary,

             (ii)   so much of the Participating After-Tax Contributions and
                    corresponding Employer Contributions, as is necessary to
                    meet the test will be reduced, with the After-Tax
                    Contributions, together with Earnings, being paid to the
                    Participant and the Employer Contributions, together with
                    Earnings, being reduced, with vested Employer Contributions
                    being paid to the Participant and Employer Contributions
                    which are forfeitable under the

                                                                              69


                    Plan being forfeited and applied to reduce Employer
                    Contributions; then if necessary,

             (iii)  so much of the Employer Contributions, together with
                    Earnings, as is necessary to equal the balance of the Excess
                    Aggregate Contributions will be reduced, with vested
                    Employer Contributions being paid to the Participant and
                    Employer Contributions which are forfeitable under the Plan
                    being forfeited and applied to reduce Employer
                    Contributions.

     (c)     Any repayment or forfeiture of Excess Aggregate Contributions will
be made before the close of the Plan Year following the Plan Year for which the
Excess Aggregate Contributions were made and, to the extent practicable, any
repayments or forfeiture will be made within 2 1/2 months of the close of the
Plan Year in which the Excess Aggregate Contributions were made.

     8.03    SEPARATE NON-DISCRIMINATION TESTING

     Effective for Plan Years beginning on and after January 1, 2002, solely for
purposes of determining whether the Thrift Plan and the ESOP satisfy the Average
Actual Deferral Percentage Test and the Average Contribution Percentage all
Employer Contributions allocated to the Company Stock Fund are treated as
contributions to the ESOP and tested separately.


     8.04    MAXIMUM ANNUAL ADDITIONS

     (a)     Except to the extent permitting Catch-Up Contributions in
accordance with Code Section 414(v), the annual addition to a Participant's
Account Balance for any Plan Year, (the "Limitation Year") when added to the
Participant's annual addition for the Limitation Year under any other qualified
defined contribution plan of the Company or an Affiliate, may not exceed the
lesser of (1) 25% or, for Plan Years beginning on January 1, 2002,

                                                                              70


100%, of his or her Compensation for the Plan Year or (2) the greater of $30,000
or, for Plan Years beginning on January 1, 2002, $40,000, as adjusted for
increases in the Cost-Of-Living Adjustment.

     (b)     For purposes of this Section, the annual addition to a
Participant's Account Balance under this Plan or any other qualified defined
contribution plan maintained by the Company or an Affiliate will be the sum of:

        (1)  the total contributions, including Pre-Tax Contributions, made on
             the Participant's behalf by each Employer and all Affiliates,

        (2)  all After-Tax Contributions, exclusive of any Rollover
             Contributions,

        (3)  all Employer Contributions; and

        (4)  forfeitures, if applicable, that have been allocated to the
             Participant's Account Balance under this Plan or his or her
             accounts under any other such qualified defined contribution plan.
             Any Pre-Tax Contributions distributed under Section 8.01 and any
             Employer Contributions or After-Tax Contributions distributed or
             forfeited under the provisions of Section 3.01, 8.01, 8.02 or 8.03
             shall be included in the annual addition for the year allocated.

     (c)     If the annual addition to a Participant's Account Balance for any
Plan Year, prior to the application of the limitation set forth in paragraph (a)
above, exceeds that limitation due to a reasonable error in estimating a
Participant's Compensation or in determining the amount of Pre-Tax Contributions
that may be made with respect to a Participant under Code Section 415, or as the
result of the allocation of forfeitures, the amount of contributions credited to
the Participant's Account Balance in that Plan Year shall

                                                                              71


be adjusted to the extent necessary to satisfy that limitation in accordance
with the following order of priority:

        (1)  The Participant's Non-Participating After-Tax Contributions shall
             be reduced to the extent necessary. The amount of the reduction
             shall be returned to the Participant, together with any earnings on
             the contributions to be returned.

        (2)  The Participant's Non-Participating Pre-Tax Contributions shall be
             reduced to the extent necessary. The amount of the reduction shall
             be returned to the Participant, together with any earnings on the
             contributions to be returned.

        (3)  The Participant's Participating After-Tax Contributions and
             corresponding Employer Contributions shall be reduced to the extent
             necessary. The amount of the reduction attributable to the
             Participant's Participating After-Tax Contributions shall be
             returned to the Participant, together with any earnings on those
             contributions to be returned, and the amount attributable to the
             Employer Contributions shall be forfeited and used to reduce
             subsequent contributions payable by the affected Employer.

        (4)  The Participant's Participating Pre-Tax Contributions and
             corresponding Employer Contributions shall be reduced to the extent
             necessary. The amount of the reduction attributable to the
             Participant's Participating Pre-Tax Contributions shall be returned
             to the Participant, together with any earnings on those
             contributions to be returned, and the amount attributable to the
             Employer Contributions shall be forfeited and used to reduce
             subsequent contributions payable by the affected Employer.

                                                                              72


     (d)     Any Pre-Tax Contributions returned to a Participant under this
paragraph (d) shall be disregarded in applying the dollar limitation of Pre-Tax
Contributions under Section 3.01(b), and in performing the Actual Deferral
Percentage Test under Section 8.01. Any After-Tax Contributions returned shall
be disregarded in performing the Actual Contribution Percentage Test under
Section 8.02.

                                                                              73


                                   ARTICLE IX

                                      LOANS

     9.01    LOANS PERMITTED

     Upon terms and conditions set forth in this Article 9, and in accordance
with such uniform rules as the Plan Administrator may adopt, a Participant who
is not on a leave of absence and remains on the active payroll may borrow from
his or her Account Balance. The Plan Administrator or his or her delegate is
authorized to administer the loan program under this Article 9. Any Participant
who is an Employee, a former Employee, or a Beneficiary of an O&R Participant,
and who is also a "party-in-interest" (as defined in Section 3(14) of ERISA) to
the Plan, may borrow from his or her Account Balance.

     9.02    AMOUNT OF LOANS

     The minimum amount of any loan is $1,000 for a CECONY or CEI Participant
and $500 for an O&R Participant. Effective January 1, 2002, the minimum amount
of a loan for a CECONY or CEI Participant will be $500. The amount of any loan
to a Participant may not exceed the lesser of (a) or (b), where (a) is $50,000
reduced by the excess (if any) of (i) the highest outstanding balance of loans
to the Participant from the Plan during the one-year period ending on the day
before the date on which such loan is made, over (ii) the outstanding balance of
loans to the Participant from the Plan on the date on which such loan is made,
and (b) is one-half of the vested portion of the Participant's Account Balance.
Outstanding balance of loans means the outstanding amount of all loans from the
Plan and any other qualified plans of the Company or an Affiliate.

     9.03    SOURCE OF LOANS

                                                                              74


     (a)     Funds for loans from a Participant's Account Balance shall be taken
from the Participant's Subaccounts in the following order:

        (1)  For a CECONY Participant:

             (i)    Non-Participating Pre-Tax Contributions and Earnings;

             (ii)   Participating Pre-Tax Contributions and Earnings;

             (iii)  Rollover Contributions and Earnings;

             (iv)   Vested Employer Contributions and Earnings that have been in
                    the Account Balance for three full calendar years for a
                    CECONY Weekly Participant and two full calendar years for a
                    CECONY or CEI Management Participant after the contribution
                    year and Earnings;

             (v)    Non-Participating After-Tax Contributions and Earnings; and

             (vi)   Participating After-Tax Contributions and Earnings.

        (2)  For an O&R Participant:

             (i)    Pre-Tax Contributions and Earnings;

             (ii)   Rollover Contributions and Earnings; and

             (iii)  After-tax Contributions and Earnings.

     (b)     No loan will be made from a Subaccount or a part of a Subaccount
until the entire balance in the Subaccount or part of the Subaccount preceding
it on the above list has been exhausted. Within each Subaccount or part thereof,
funds for loans will be taken on an average cost basis and pro-rata from each
Investment Fund within the Subaccount or part of the Subaccount, and such
pro-rata portion of each Investment Fund will be converted to cash for the loan
based upon the market value of the investment on the date of conversion.

     9.04    INTEREST RATE

                                                                              75


     The interest rate to be charged on loans will be a reasonable rate of
interest determined from time to time by the Plan Administrator. In determining
such rate the Plan Administrator seeks to provide to the Plan a rate of return
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances on the
date the loan is approved. The interest rate will be fixed for the entire term
of the loan.

     Effective for loans originating before January 1, 2001, the interest rate
to be charged to an O&R Participant is the effective interest rate charged by
the Orange and Rockland Employees' Federal Credit Union for a 48 month
share-secured loan. The interest rate to be charged for a principal residence
loan to an O&R Management Participant will be based upon Federal National
Mortgage Association mortgage rates. Effective for loans originating after
January 1, 2001, the interest rate to be charged to an O&R Participant will be
the same interest rate applicable to a CECONY Participant.

     9.05    REPAYMENT

     The Participant may select a period of one, two, three, four or five years
for repayment of a loan, except that the Participant may, at his or her option,
select a longer period of whole years, not exceeding ten, (20 in the case of an
O&R Management Participant) for repayment of a loan for the purpose of
purchasing his or her principal residence. Repayment will be made by level
payments, not less frequently than quarterly, in such amount as shall be
sufficient to pay the principal and interest thereon over the period for
repayment. Repayment shall be made by payroll deductions, except that in the
case of a Participant who is not on the active payroll, repayments may continue
to be made by check or other similar means as the Plan Administrator shall
determine. Prepayment by a CECONY Weekly Participant of a loan in full, without
penalty, may be made only after 52

                                                                              76


weekly payments have been made. Prepayment by an O&R Participant of a loan in
full, without penalty, and prepayment by a CECONY Management or CEI Participant
of a loan in full or in part, without penalty, may be made at any time by
personal check or money order. The amount of each loan payment shall be placed
into the Investment Funds, except the Company Stock Fund, in accordance with the
most recent investment election made by the Participant with respect to the
Participant's Contributions. Notwithstanding the foregoing, a loan which is made
to a Participant who is an Employee shall become due and payable in full upon
the Employee's termination of employment; provided, however, that if a
Participant becomes an employee of a buyer or one of its affiliates following
the sale of the Company's or an Affiliate's assets, and if the Participant's
Account is transferred to a qualified plan maintained by the buyer or one of its
affiliates (the "Buyer's Plan"), any outstanding loan at his or her termination
of employment with the Company will not be due and payable in full at
termination but will instead be transferred to the Buyer's Plan.

     9.06    MULTIPLE LOANS

     A CECONY Weekly Participant may not have more than one loan outstanding at
a time. A CECONY Management or CEI Participant may not have more than one loan
granted in a calendar year unless all earlier loans made in the same calendar
year to the Participant shall have been repaid in full. An O&R Participant may
not have more than one loan outstanding at any time and may make a request for a
loan only once in a twelve month period.

     9.07    PLEDGE

     The vested portion of the Participant's Account Balance shall be pledged as
security for all loans to the Participant. The amount pledged shall not be
greater than fifty percent of the Participant's vested portion. If a default
occurs in the repayment of a loan, the entire

                                                                              77


unpaid principal balance plus accrued interest, if any: (i) will be charged,
when the Participant becomes eligible to receive a distribution, against that
portion of the Participant's vested portion which serves as security for the
loan; (ii) will be deducted, if a distribution is to made, from the amount
payable to the Participant or the Participant's Beneficiary; or (iii) if neither
(i) nor (ii) applies, will continue to encumber that portion of the
Participant's vested portion that serves as security for the loan.

     9.08    LOAN RESERVE

     The amount of each loan to a Participant will be transferred from the
portion of the Trust Fund held for the Participant's Account Balance and
invested pursuant to Section 5.02 to a special Loan Reserve maintained for such
Participant's Account Balance. Such Loan Reserve will be invested solely in the
loan or loans made to the Participant. Payments on any such loan will reduce the
Participant's Loan Reserve and will be reinvested for the Participant's Account
Balance in accordance with Section 9.05.

     9.09    MINIMUM ACCOUNT BALANCE

     So long as any amount of a loan remains outstanding to a Participant, the
Participant may not make any withdrawal from his or her Account Balance that
would reduce the value of his or her vested portion to less than his or her Loan
Reserve.

     9.10    OTHER TERMS

     Each loan will be evidenced by a promissory note payable to the Trustee.
The terms and conditions of any loan may be adjusted at any time, to the extent
determined by the Plan Administrator, to be necessary for compliance with law or
to maintain the qualification of the Plan under the Code.

                                                                              78


                                    ARTICLE X

                   ADMINISTRATION OF THE PLAN, ESOP AND TRASOP

     10.01   NAMED FIDUCIARIES AND PLAN ADMINISTRATOR OF PLAN ESOP AND TRASOP

     The following persons from time to time occupying the following offices of
CECONY are hereby designated as Named Fiduciaries: Chief Executive Officer,
Chief Financial Officer, and Chief Accounting Officer. CECONY may designate
other persons who, upon acceptance of such designation, shall serve as Named
Fiduciaries either instead of or in addition to those named above. Any such
designation and acceptance shall be in writing and retained by the Plan
Administrator. The Named Fiduciaries shall act by majority rule. The Named
Fiduciaries shall appoint from among the officers of CECONY a Plan Administrator
who shall serve at the discretion of the Named Fiduciaries. The Plan
Administrator shall serve without compensation for his or her services as such
and shall act solely in the interest of the Participants and their
Beneficiaries.

     Solely in this Article X, the term Plan includes the Thrift Savings Plan,
the ESOP and the TRASOP unless the context clearly designates otherwise.

     10.02   AUTHORITY OF PLAN ADMINISTRATOR

     The Plan Administrator has the discretionary authority to control and
manage the operation and administration of the Plan ESOP and, without limiting
the generality of the foregoing, shall interpret the Plan, ESOP,, determine
eligibility for benefits under the Plan, determine any facts or resolve any
questions relevant to the administration of the Plan, ESOP, and TRASOP and, in
connection therewith, may remedy and correct any ambiguities, inconsistencies,
or omissions in the Plan, ESOP and TRASOP. Any such action taken by the

                                                                              79


Plan Administrator shall be conclusive and binding on all Participants, ESOP
Participant, Beneficiaries and other persons. The Plan Administrator is
authorized to make any changes to the Plan, ESOP and TRASOP that he or she, in
his or her sole discretion, determines are necessary or desirable to carry out
(a) the transition to Vanguard Fiduciary Trust Company as Trustee, record keeper
and Investment Manager for the O&R Hourly Plan and the O&R Management Plan, (b)
the addition of new Investment Funds, (c) the merger of the CECONY Management
Plan, the O&R Hourly Plan and O&R Management Plan into this Plan, ESOP and
TRASOP, and (d) to make any other changes to facilitate administration of the
Plan, ESOP and TRASOP.

     The Plan Administrator also has the authority to adopt certain amendments
to the Plan, ESOP and TRASOP, which are (a) required or desirable in order to
implement corporate transactions such as mergers, acquisitions and divestitures;
(b) required, necessary or recommended for compliance with ERISA, the Code or
other laws; or (c) necessary or desirable for uniform or efficient
administration. In all cases, any amendment(s) adopted by the Plan Administrator
shall neither materially nor significantly increase the Employers' or the
Company's obligations or adversely affect or reduce the Account Balance of any
Participant.

     10.03   RELIANCE ON REPORTS

     The Named Fiduciaries and the Plan Administrator are entitled to rely upon
any opinions, reports, or other advice that will be furnished by specialists,
subject to fiduciary responsibilities imposed by ERISA.

     10.04   DELEGATION OF AUTHORITY

     With approval of the Named Fiduciaries, the Plan Administrator may
designate one or more persons to exercise any power, or perform any duty, of the
Plan Administrator. Any

                                                                              80


such designation will be in writing and signed by the Plan Administrator and the
Named Fiduciaries and a copy thereof will be delivered to the Trustee.

     10.05   ADMINISTRATION EXPENSES

     All expenses arising in connection with the operation and administration of
the Plan will be paid by the Plan, ESOP or TRASOP, as applicable.

     The expenses of administration of the TRASOP shall include, without
limitation, transfer taxes, postage, brokerage commissions and other direct
selling expenses incurred by the Trustee in the sale of Shares pursuant to
Article XIII, losses incurred by the Trustee on funds invested pursuant to
Article XIII, and fees of the Trustee in connection with the administration of
TRASOP, including fees for legal services rendered to the Trustee (whether or
not rendered in connection with a judicial or administrative proceeding and
whether or not incurred while it is acting as Trustee), but shall excludes
brokerage fees and commissions for purchases of Shares pursuant to Section
13.02, which brokerage fees and commissions shall be paid out of the dividends
being reinvested thereby. Such expenses of administration of TRASOP will, to the
extent permitted by law, be paid:

             (i)    first, out of any available income of TRASOP;

             (ii)   second, out of any available dividends received by the
                    Trustee on Shares allocated to Participants pursuant to
                    Section 13.02, which dividends have not then been applied to
                    the purchase of additional Shares pursuant to Section 13.02;
                    and

             (iii)  Third, by CECONY.

     In no event shall the amounts paid by the Trustee during such Plan Year
pursuant to clauses "first" and "second" above, exceed the smaller of: the sum
of (x)10 percent of the first $100,000 and (y) 5 percent of an amount in excess
of $100,000 of the income from

                                                                              81


dividends paid to the Trustee with respect to common stock of the Company during
such Plan Year or $100,000.

     10.06   FIDUCIARY INSURANCE

     The Employers may purchase and carry fiduciary responsibility insurance
under which each member of the Board, each Named Fiduciary, the Plan
Administrator, and any person, including each employee, to whom there may be
delegated any responsibility in connection with the administration of the Plan,
including the Trustee, will be indemnified against any cost or expense
(including counsel's fees) or liability which may be incurred arising out of any
act or failure to act in the administration of this Plan, except for gross
negligence or willful misconduct.

     10.07   CLAIM REVIEW

     (a)     Upon receipt from a Participant or Beneficiary of an initial claim
for benefits, the Plan Administrator shall respond in writing and deliver or
mail to the Participant or Beneficiary within 90 days following the date on
which the initial claim is filed. If the initial claim is denied, in part or
totally, the Plan Administrator shall set forth the specific reasons for the
denial, written in a plain and understandable manner, with specific reference to
pertinent Plan, ESOP and TRASOP provisions on which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, an explanation of why such material or information is
necessary, and an explanation of the Plan's ESOP and TRASOP claim review
procedure. If special circumstances require an extension of time for processing
the claim, written notice of an extension shall be furnished to the claimant
prior to the end of the initial period of 90 days following the date on which
the claim was filed. Such an extension may not exceed a period of 90 days beyond
the end of the initial period. If the claim has not been granted, and if written
notice of the denial of the

                                                                              82


claim is not furnished within 90 days following the date on which the claim is
filed, the claim shall be deemed denied for the purpose of proceeding to the
claim review procedure.

     (b)     CLAIM REVIEW PROCEDURE. A Participant, Beneficiary, or the
authorized representative of either shall have 60 days after receipt of written
notification of denial of a claim to request a review of the denial by making
written request to the Plan Administrator. The Plan Administrator shall give the
Participant, Beneficiary, or the authorized representative of either an
opportunity to appear to review pertinent documents, to submit issues and
comments in writing, and to present evidence supporting the claim. Not later
than 60 days after receipt of the request for review, the Plan Administrator
shall render and furnish to the claimant a written decision which shall include
specific reasons for the decision, and shall make specific references to
pertinent Plan provisions on which it is based. If special circumstances require
an extension of time for processing, the decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review,
provided that written notice and explanation of the delay are given to the
claimant prior to commencement of the extension. Such decision by the Plan
Administrator shall not be subject to further review. If a decision on review is
not furnished to a claimant within the specified time period, the claim will be
deemed to have been denied on review.

     (c)     EXHAUSTION OF REMEDY. No claimant shall institute any action or
proceeding in any state or federal court of law or equity, or before any
administrative tribunal or arbitrator, for a claim for benefits under the Plan
until he or she has first exhausted the procedures set forth in this section.

     10.08   APPOINTMENT OF TRUSTEE

     The Trustee will be appointed by the Board.

     10.09   LIMITATION OF LIABILITY

                                                                              83


     The Company, the Board, the Named Fiduciaries, the Plan Administrator, the
Employers and any officer, Employee or agent of the Company and each Employer
shall not incur any liability individually or on behalf of any other individuals
or on behalf of the Company or Employers for any act or failure to act, made in
good faith in relation to the Plan or the funds of the Plan. However, this
limitation shall not act to relieve any such individual or the Company or
Employers from a responsibility or liability for any fiduciary responsibility,
obligation or duty under Part 4, Title I, of ERISA.

                                                                              84


                                   ARTICLE XI

                                  MISCELLANEOUS

     11.01   EXCLUSIVE BENEFIT - AMENDMENTS

     It shall be impossible for any part of the corpus or income of the Trust
Fund, ESOP Trust Fund or the TRASOP Trust Fund to be used for or diverted to
purposes other than for the exclusive benefit of Participants or Beneficiaries
entitled to benefits under the Plan and for paying the expenses of the Plan. No
person has any interest in, or right to, any part of the Trust Fund except as
and to the extent expressly provided in the Plan. Subject to the foregoing, the
Plan may be amended, in whole or in part, at any time and from time to time by
the Board or pursuant to authority granted by the Board and any amendment may be
given such retroactive effect as the Board or its duly authorized delegate may
determine. If an Employer, other than CECONY, wishes to amend the Plan as to its
participating employees, that Employer will present a resolution of its board of
directors approving the proposed amendment and requesting CECONY to amend the
Plan. CECONY shall have the sole discretion whether to amend the Plan as
requested by an Employer.

     Solely in this Article XI, the term Plan includes the Thrift Savings Plan,
the ESOP and the TRASOP and reference to the Trust Fund includes the ESOP Trust
Fund and the TRASOP Trust Fund, unless the context clearly designates otherwise.

     11.02   TERMINATION - SALE OF ASSETS OF SUBSIDIARY

     (a)     The Plan may be partially or fully terminated or contributions may
be permanently discontinued for any reason at any time by the Board. In the
event of a partial or total termination of the Plan or permanent discontinuance
of contributions under the Plan:

                                                                              85


(i) no contribution will be made thereafter except for a Payroll Period the last
day of which coincides with or precedes such termination or discontinuance; (ii)
no distribution shall be made except as provided in the Plan; (iii) the rights
of all Participants to the entire amounts to the credit of their Account
Balances as of the date of such termination or partial termination or
discontinuance shall become 100% vested; (iv) no person shall have any right or
interest except with respect to the Trust Fund; (v) any remaining forfeitures
shall be considered a special Employer Contribution and shall be allocated on a
pro-rata basis, based on Account Balance, to all Participants with an Account
Balance as of the date of termination, partial termination or discontinuance;
and (vi) the Trustee shall continue to act until the Trust Fund shall have been
distributed in accordance with the Plan.

     (b)     Upon termination of the Plan, Pre-Tax Contributions, with Earnings,
will be distributed to Participants only if neither the Company, Employers nor
an Affiliate establishes or maintains a successor defined contribution plan. For
purposes of this paragraph, a "successor defined contribution plan" is a defined
contribution plan, other than an employee stock ownership plan as defined in
Code Section 4975(e)(7) or a simplified employee pension as defined in Code
Section 408(k) which exists at the time the Plan is terminated or within the
12-month period beginning on the date all assets are distributed. A defined
contribution plan will not be deemed a successor plan if fewer than two percent
of the Employees who are eligible to participate in the Plan at the time of its
termination are or were eligible to participate under another defined
contribution plan of the Company or an Affiliate (other than an ESOP or a SEP)
at any time during the period beginning 12 months before and ending 12 months
after the date of the Plan's termination.

                                                                              86


     11.03   BENEFICIARIES

     Upon the death of a Participant, his or her Account Balance shall be
payable in a lump sum to his or her surviving spouse. If there is no surviving
spouse or the surviving spouse has consented, in the manner provided in this
Section 11.03, to a designation of a Beneficiary in addition to or instead of
such spouse, and such designation is in effect at the time of the Participant's
death, the Participant's Account Balance will be paid to such Beneficiary.
Effective beginning June 1, 2002, the surviving spouse or Beneficiary(ies) may
elect to take a distribution in monthly, quarterly or yearly installments up to
but not exceeding a 15-year period; providing, however, that any distribution
election is consistent with Code Section 401(a)(9) and the regulations
promulgated thereunder. Each Participant may designate a primary or contingent
Beneficiary or Beneficiaries in the event of the death of the Participant prior
to distribution of such benefits. The Participant may file a written designation
with the Plan, on a form furnished by the Plan Administrator, or his or her
delegate. Such designation shall be effective only if (1) such designation is
accompanied by the written consent of the Participant's spouse which
acknowledges the effect on the spouse of the designation and it witnessed by a
notary public, or (2) the Participant if not married. Any such designation made
by an unmarried Participant shall become null and void in the event the
unmarried Participant marries before his or her Annuity Starting Date. Any
consent of a spouse shall be effective only with respect to such spouse. If, at
the time of a Participant's death, there is no surviving spouse of the
Participant and no designation of a Beneficiary by such Participant is in
effect, then the Participant's benefits shall be payable to his or her estate or
legal representative. A Participant may revoke a designation made pursuant to
this Section 11.03 by signing and filing with the Plan Administrator or his or
her delegate a written instrument to that effect, in such manner and on such
conditions as may be

                                                                              87


prescribed by the Plan Administrator, or by filing a new designation pursuant to
this Section 11.03. The consent of a Participant's spouse may not be revoked,
but such spouse's consent shall be required for every designation of a
Beneficiary other than the Participant's spouse and for every change in any such
designation. The requirement for spousal consent may be waived by the Plan
Administrator if he or she believes there is no spouse, or the spouse cannot be
located, or because of such other circumstances as may be established by
applicable law.

     11.04   ASSIGNMENT OF BENEFITS

     (a)     No Participant or Beneficiary shall have the right to assign,
transfer, alienate, pledge, encumber or subject to lien any benefits to which he
or she is entitled under the Plan. Nothing in this Section shall preclude
payment of Plan benefits pursuant to a qualified domestic relations order as
defined in Code Section 414(p) and Section 206(d) of ERISA. The Plan
Administrator will establish a written procedure to determine the qualified
status of domestic relations orders and to administer distributions under such
qualified orders.

     (b)     Notwithstanding anything herein to the contrary, if the amount
payable to the alternate payee under the qualified domestic relations order is
$5,000 or less, such amount shall be paid in one lump sum as soon as practicable
following the qualification of the order. If the amount exceeds $5,000, it may
be paid as soon as practicable following the qualification of the order if the
alternate payee consents thereto; otherwise it may not be payable before the
earliest of (1) the Participant's termination of employment, (2) the time such
amount could be withdrawn under Article 7 or (3) the Participant's attainment of
age 50.

     (c)     A Participant's Account Balance may be offset against the amount
owed to the Plan as a result of a breach of fiduciary duty to the Plan or
criminality involving the Plan.

                                                                              88


The participant's Account Balance will be reduced to satisfy liabilities of the
Participant to the Plan due to: (1) the Participant being convicted of
committing a crime involving the Plan; (2) a civil judgment (or consent order or
decree) being entered by a court in an action brought in connection with a
violation of ERISA's fiduciary duty rules; or (3) a settlement agreement between
the Secretary of Labor and the Participant in connection with a violation of
ERISA's fiduciary rules. If the Participant is married at the time at which the
offset is to be made, either the Participant's spouse must consent in writing to
these offset (unless there is no spouse, the spouse cannot be located, or due to
other circumstances prescribed by the Secretary pursuant to Code Section
417(a)(2)(B)), or a spousal waiver of survivor benefits must be in effect for
the offset to take place. Spousal consent is not required if the spouse is
ordered or required by the judgment, order, decree, or settlement to pay an
amount to the Plan in connection with a violation of Part 4 of Title I of ERISA.
Spousal consent is not required where, in the judgment, order, decree, or
settlement, the spouse retains the right to receive a 50% survivor annuity under
a qualified joint and survivor annuity and under a qualified pre-retirement
survivor annuity. The amount of a benefit that is so offset is includible in
income on the date of the offset.

                                                                              89


     11.05   MERGER

     The Plan may not be merged or consolidated with, or its assets or
liabilities may not be transferred to any other plan unless each person entitled
to benefits under the Plan would, if the resulting plan were then terminated,
receive immediately after the merger or consolidation, or transfer of assets or
liabilities, a benefit which is equal to or greater than the benefit he or she
would have been entitled to receive immediately before the merger, consolidation
or transfer if the Plan had then terminated.

     In the event of a corporate transaction, divestiture of assets or an
Affiliate, or other corporate reorganization in which one or a group of
Participants are transferred to another employer, the Plan Administrator, in his
or her sole discretion, may effectuate a trust-to-trust transfer of affected
Participants' Account Balance to the other employer's qualified defined
contribution plan.

     In the event of a corporate acquisition, merger, or other corporate
reorganization in which one or a group of persons become Employees, the Plan
Administrator, in his or her sole discretion, or if CECONY so requires, may
accept a trust-to-trust transfer of the affected persons' Account Balance from
another employer's qualified defined contribution plan to the Plan.

     11.06   CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN

     The establishment and maintenance of the Plan shall not confer any legal
rights upon any Employee or other person for a continuation of employment, nor
shall it interfere with the rights of the Employers to discharge any Employee
and to treat him or her without regard to the effect which that treatment might
have upon him or her as a Participant or potential Participant of the Plan.

     11.07   FACILITY OF PAYMENT

                                                                              90


     If the Plan Administrator finds that a Participant or other person entitled
to a benefit is unable to care for his or her affairs because of illness or
accident or is a minor, the Plan Administrator may direct that any benefit due
him or her, unless claim has been made by a duly appointed legal representative,
be paid to his or her spouse, a child, a parent or other blood relative, or to a
person with whom he or she resides. Any payment so made shall be a complete
discharge of the liabilities of the Plan for that benefit.

     11.08   INFORMATION

     Each Participant, Beneficiary or other person entitled to a benefit, before
any benefit is payable to him or her/on his or her account under the Plan, shall
file with the Plan Administrator the information that the Plan Administrator
requires to establish his or her rights and benefits under the Plan.

     11.09   ADDITIONAL PARTICIPATING EMPLOYERS

     (a)     If any entity is or becomes an Affiliate, the Board may include the
employees of that Affiliate in the participation of the Plan upon appropriate
action by that Affiliate necessary to adopt the Plan. If any person becomes an
Employee as the result of a merger, a consolidation, or an acquisition of all or
part of the assets or business of another company, the Board shall determine to
what extent, if any, previous service with the other entity will be recognized
under the Plan, subject to the continued qualification of the trust for the Plan
as tax-exempt under the Code.

     (b)     An Employer may terminate its participation in the Plan upon
appropriate action. In that event, the funds of the Plan held on account of
Participants in the employ of that Affiliate, and any unpaid Account Balances of
Participants who have separated from the employ of that Affiliate, shall be
determined by the Plan Administrator. Those funds will be distributed as
provided in and permitted under Section 11.02 if the Plan, as to that employer,

                                                                              91


is terminated, or segregated by the Trustee to a separate trust, pursuant to
certification to the Trustee by the Plan Administrator, continuing the Plan as a
separate plan for the employees of that Affiliate under which the board of
directors of that Affiliate will succeed to all the powers and duties of the
Board, including the appointment of named fiduciaries and plan administrator.

     11.10   IRS DETERMINATION

     All contributions made to the Trust Fund, and all loans made pursuant to
Article 9, which are made prior to the receipt of a determination from the
Internal Revenue Service to the effect that the Plan is a qualified plan under
Code Sections 401 (a) and 401(k) or the refusal of the IRS in writing to issue
such a determination, shall be made on the express condition that such
determination is received. In the event the Internal Revenue Service determines
that the Plan is not so qualified or refuses in writing to make such
determination, such contributions, increased by any earnings thereon, and
reduced by any losses thereon and by the outstanding balance (principal and
interest) on any loans made under Article 9, shall be returned to the
Employer(s) and Participants, as appropriate, as promptly as practicable after
such determination. In the event the Internal Revenue Service requires
reductions in such contributions and/or changes in the terms and conditions of
such loans as a condition of its determination that the Plan is so qualified,
the required reductions in contributions, increased by any earnings and reduced
by any losses attributable thereto, shall be returned to the Employer(s) and
Participants, as appropriate, and/or the amounts and terms and conditions of any
such outstanding loans shall be modified to meet Internal Revenue Service
requirements, as promptly as practicable after notification from the Internal
Revenue Service. If all or part of an Employer's deductions under Code Section
404 for Employer Contributions to the Plan are disallowed by the Internal
Revenue Service, the portion of the

                                                                              92


Employer Contributions to which the disallowance applies shall be returned to
that Employer without earnings thereon, but reduced by any losses attributable
thereto. The return shall be made within one year after the denial of
qualification or disallowance of deduction, as the case may be.

     11.11   MISTAKEN CONTRIBUTIONS

     Any contribution made by mistake of fact shall be returnable, without any
earnings thereon but reduced by any losses attributable thereto, to the
Employer(s) and/or Participants, as appropriate within one year after the
payment of the contribution.

     11.12   PREVENTION OF ESCHEAT

     If the Plan Administrator cannot ascertain the whereabouts of any person to
whom a payment is due under the Plan, the Plan Administrator may, no earlier
than three years from the date such payment is due, mail a notice of such due
and owing payment to the last known address of such person, as shown on the
records of the Plan or Employer. If such person has not made written claim
therefor within three months of the date of the mailing, the Plan Administrator
may, if he or she so elects and upon receiving advice from counsel to the Plan,
direct that such payment and all remaining payments otherwise due such person be
canceled on the records of the Plan and the amount thereof applied to reduce the
contributions of the applicable Employer. Upon such cancellation, the Plan and
the Trust shall have no further liability therefor except that, in the event
such person or his or her beneficiary later notifies the Plan Administrator of
his or her whereabouts and requests the payment or payments due to him under the
Plan, the amount so applied shall be paid to him or her in accordance with the
provisions of the Plan.

     11.13   CONSTRUCTION

                                                                              93


     The Plan shall be construed, regulated and administered under ERISA and the
laws of the State of New York, except where ERISA controls. In the event a
claimant institutes an action or proceeding in any state or federal court of law
or equity, the applicable "statute of limitations" for such action will be New
York State statute for actions brought in contract matters.

                                                                              94


                                   ARTICLE XII

                              TOP-HEAVY PROVISIONS

     12.01   APPLICATION OF TOP-HEAVY PROVISIONS

     This Article XII shall apply for purposes of determining whether the plan
is a top-heavy plan under Code Section 416(g) for Plan Years beginning after
December 31, 2001, and whether the Plan satisfies the minimum benefit
requirements of Code Section 416(c) for such years.

     12.02   MINIMUM BENEFIT FOR TOP-HEAVY YEAR

     (a)     KEY EMPLOYEE. Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan Year that
includes the determination date was an officer of the Company or Affiliate
having Annual Compensation greater that $130,000 (as adjusted under Code Section
416(i)(1) beginning after December 31, 2002, a 5-percent owner of the Company or
Affiliate or a 1-percent owner of the Company or Affiliate having Annual
Compensation of more than $150,000. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the applicable
regulations and other guidance of general applicability issued thereunder.

     (b)     DETERMINATION OF PRESENT VALUES AND AMOUNTS. This section 12.02(b)
shall apply for purposes of determining the present values of accrued benefits
and the amounts of Account Balances of Employees as of the determination date.

             (i)    Distributions during the year ending on the determination
                    date. The present values of accrued benefits and the amounts
                    of Account Balances of an Employee as of the determination
                    date shall be increased by the

                                                                              95


                    distributions made with respect to the Employee under the
                    Plan and any Plan aggregated with the Plan under Code
                    Section 416(g)(2) during the 1-year period ending on the
                    determination date. The preceding sentence shall also apply
                    to distribution under a terminated plan which, had if not
                    been terminated, would have been aggregated with the plan
                    under Code Section 416(g)(2)(A)(i). In the case of a
                    distribution made for a reason other than separation from
                    service, death, or disability, this provision shall be
                    applied by substituting "5-year period" for "1-year period."

             (ii)   Employees not performing services during year ending on the
                    determination date. The accrued benefits and Account
                    Balances of any individual who has not performed services
                    for the Company or an Affiliate during the 1-year period
                    ending on the determination date shall not be taken into
                    account.

     12.03   MINIMUM BENEFITS

     Matching Contributions. Employer Contributions shall be taken into account
for purposes of satisfying the minimum contribution requirements of Code Section
416(c)(2) and the Plan. Employer Contributions that are used to satisfy the
minimum contribution requirements shall be treated as matching contributions for
purposes for the Actual Contribution Percentage Test and other requirements of
Code Section 401(m).

     12.04   AGGREGATION GROUPS

     (a)     Notwithstanding anything to the contrary herein, this Plan shall
not be a Top-Heavy Plan if it is part of either a "required aggregation group"
or a "permissive aggregation group" that is not a Top-Heavy Group.

     (b)     The "required aggregation group" consists of:

                                                                              96


             (i)    Each Defined Contribution Plan or Defined Benefit Plan in
                    which at least one Key Employee participates; and
             (ii)   Each other Defined Contribution Plan or Defined Benefit Plan
                    which enables a plan referred to in the preceding
                    subparagraph (i) to meet the nondiscrimination requirements
                    of Section 401(a)(4) or 410 of the Code.

     (c)     A "permissive aggregation group" consists of the plans included in
the "required aggregation group" plus any one or more other Defined Contribution
Plans or Defined Benefit Plans which, when considered as a group with the
"required aggregation group", would continue to meet the nondiscrimination
requirements of Section 401(a)(4) and 410 of the Code.

     12.05   SPECIAL BENEFIT LIMITS

     For any Plan Year for which this Article 12 is applicable the definitions
of "Defined Benefit Plan Fraction" and "Defined Contribution Plan Fraction" in
Sections 1.20 and 1.22, respectively, shall be modified in each case by
substituting "1.0"for "1.25".

     12.06   SPECIAL DISTRIBUTION RULE

     For any Plan Year for which this Article 12 is applicable, Section 7.08(a)
shall apply to Key Employees.

                                                                              97


                                  ARTICLE XIII

                     TAX REDUCTION ACT STOCK OWNERSHIP PLAN

     13.01   PURPOSE - SEPARATE ENTITY

     (a)     The TRASOP, is a stock bonus plan, established under the Tax
Reduction Act of 1975 was intended to give eligible participants an equity
interest in CECONY and encourage those participants to remain in the employ of
CECONY. The TRASOP is invested in Shares and in a short-term investment fund of
cash and cash equivalents. Applicable laws do not permit additional
contributions to the TRASOP. CECONY desires to continue the TRASOP Accounts of
Participants having such accounts. Effective as of July 1, 1988, all TRASOP
Accounts were transferred to this Plan, and all TRASOP provisions which continue
to be applicable were added to this Plan and shall, together with other
applicable provisions of this Plan, govern the TRASOP Accounts.

     (b)     Participant's Plan Account Balances and TRASOP Accounts shall be
administered separately, although they shall be held as part of the same Trust
Fund. There shall be no transfers between TRASOP Accounts and Plan Accounts.

     (c)     All matters relating to the TRASOP which relate to or arise out of
facts, circumstances or conditions in effect prior to July 1, 1988, shall be
governed by the provisions of the TRASOP as in effect on June 30, 1988 prior to
the merger, unless expressly otherwise provided in this Plan.

     (d)     Effective on or after January 1, 2002, the Economic Growth and Tax
Reduction Recovery Act of 2001 amended the definition of applicable dividend to
allow a deduction for dividends paid on applicable employer securities with
respect to which participants or beneficiaries are provided an election to have
the dividend paid to an ESOP

                                                                              98


and distributed in cash, or reinvested in qualifying employer securities. The
deduction is available both with respect to dividends that are reinvested and
paid out in cash. Accordingly, effective January 1, 2002, the TRASOP is being
amended to provide participants or beneficiaries with the election to have
dividends paid in cash or reinvested, as set forth below.

     13.02   TRASOP ACCOUNTS - APPLICATION OF DIVIDENDS

     (a)     The TRASOP Account of each Participant in TRASOP who remained in
the employ of CECONY on July 1, 1988 was transferred to this Plan effective as
of July 1, 1988. Each such Participant shall continue to have a nonforfeitable
right to all Shares allocated and all amounts credited to such Participant's
TRASOP Account.

     (b)     All dividends received by the Trustee with respect to Shares
allocated to the TRASOP Accounts of Participants shall be applied to the
purchase of additional Shares. Such purchases shall be made promptly after the
receipt of each such dividend. The Trustee shall purchase, in one or more
transactions, the maximum number of whole Shares obtainable at then prevailing
prices, including brokerage commissions and other reasonable expenses incurred
in connection with such purchases. Such purchases may be made on any securities
exchange where Shares are traded, in the over-the-counter market, or in
negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interest of the
Participants. The Trustee shall complete such purchases as soon as practical
after receipt of such dividends, having due regard for any applicable
requirements of law affecting the timing or manner of such purchases. The
additional Shares so purchased shall be allocated among the respective TRASOP
Accounts of the Participants in proportion to the number of Shares in each
TRASOP Account at the record date for the payment of the dividend so applied.
Such allocation shall be made as

                                                                              99


promptly as practicable but for purposes of determining the time at which such
additional Shares shall become distributable pursuant to Section 13.04, the
additional Shares so allocated to each Participant's TRASOP Account shall be
deemed to have been allocated as of the respective allocation dates of the
Shares in such TRASOP Account at such record date, in proportion to the number
of such Shares previously allocated as of each such allocation date.

     (c)     For Plan Years beginning on and after January 1, 2002, dividends
received by the Trustee with respect to Shares allocated to the TRASOP accounts
of Participants, in accordance with the election of the Participant, will be
either paid in cash to Participants not later than 90 days after the close of
the Plan Year in which the dividends are paid, or applied by the Trustee for the
purchase of additional shares. A Participant will be given a reasonable
opportunity before a dividend is paid or distributed to make the election and
can change a dividend election at least annually. If there is a change in the
Plan governing the manner in which the dividends are paid or distributed to
Participants, each Participant will be given a reasonable opportunity to make an
election under the new Plan terms prior to the date on which the first dividend
subject to the new Plan terms is paid or distributed. A Participant who fails to
make an election as to whether to receive his or her dividend in cash or have
such dividend reinvested will be treated as if he or she elected to have his or
her dividend reinvested until such time that he or she makes an affirmation
election for a distribution of the dividend. Dividends that are distributed will
be held and invested in a short-term investment fund or like kind of cash
account until distributed.

     13.03   VOTING RIGHTS, OPTIONS, RIGHTS, AND WARRANTS

     (a)     Each Participant shall be entitled to direct the Trustee as to the
manner in which any Shares or fractional Shares allocated to the Participant's
TRASOP Account are to

                                                                             100


be voted.

     (b)     In the event that any option, right, or warrant shall be granted or
issued with respect to any Shares allocated to the Participant's TRASOP Account,
each Participant shall be entitled to direct the Trustee whether to exercise,
sell, or deal with such option, right, or warrant.

     (c)     The Trustee shall keep confidential the Participant's voting
instructions and instructions as to any option, right or warrant and any
information regarding a Participant's purchases, holdings and sales of Shares.

     13.04   DISTRIBUTION OF SHARES

     (a)     Each Share allocated to a Participant's TRASOP Account shall be
available for distribution to such Participant promptly after the earlier of the
death, disability or termination of employment of such Participant.

     (b)     Each Share which shall become distributable to a Participant by
reason of clause (a)(i) above is herein called, from the time such Share shall
become so distributable, an Unrestricted Share. Notwithstanding the provisions
of the aforesaid clause A.(i), Unrestricted Shares shall be distributed to
Participants as follows:

             (i)    From time to time, a Participant may request, in such manner
                    and on such conditions as may be prescribed by CECONY, that
                    Unrestricted Shares held in the Participant's TRASOP Account
                    be distributed to the Participant. If such Participant is
                    married, the written application shall include written
                    consent of the Participant's spouse witnessed by a Notary
                    Public. Spousal consent shall not be required with respect
                    to withdrawal requests made on or after March 1, 1994.
                    Applications made in a calendar month shall be effective as
                    of the last day of such calendar

                                                                             101


                    month. Any such request must be for whole Shares only and
                    must be for at least ten Shares or the number of whole
                    Unrestricted Shares in the TRASOP Account, whichever is
                    less.

             (ii)   Certificates for Unrestricted Shares requested in accordance
                    with the preceding paragraph B(a) shall be delivered, or a
                    cash distribution in respect of such Unrestricted Shares if
                    elected by the Participant pursuant to Section 13.04D below
                    shall be made, to the Participant as soon as practicable
                    after the effective date of the application.

             (iii)  Any Unrestricted Share which shall become distributable by
                    reason of any provision of this Plan other than clause A.(i)
                    above (including, without limitation, provision for
                    distribution upon the death, disability or termination of
                    employment of the Participant) shall be distributed in
                    accordance with such provision.

     (c)     In the case of death of a Participant, distributions in respect of
Shares allocated to the Participant's TRASOP Account shall be made to the
Participant's Beneficiary. In the case of disability or termination of
employment with the Company or an Affiliate of a Participant, distributions in
respect of Shares allocated to the Participant's TRASOP Account shall be made to
the Participant.

     All distributions under the TRASOP will begin, subject to Section 7.08 and
Subsection 13.04.F, not later than the 60th day after the close of the Plan Year
in which the latest of the following events occurs: (1) the Participant attains
age 65, (2) the 10th anniversary of the year in which the Participant commenced
participation in TRASOP, or

                                                                             102


(3) the Participant becomes disabled, dies or terminates employment with the
Company or an Affiliate.

     (d)     All distributions from a Participant's TRASOP Account shall be made
in Shares; provided, however, that a Participant or Beneficiary shall have the
right to elect, on a form furnished by and submitted to CECONY, to receive a
distribution, other than a distribution upon termination of TRASOP, in cash.
Except in the case of a final distribution from a Participant's TRASOP Account
and a distribution of the Participant's entire TRASOP Account balance after such
time as all Shares in a Participant's TRASOP Account have become Unrestricted
Shares, all distributions from such TRASOP Account shall be made in respect of
whole Shares only, and any fractional Share which is otherwise distributable
shall be retained in such TRASOP Account until it can be combined, in whole or
in part, with another fractional Share which shall subsequently become
distributable, so as to make up a whole Share. In the case of a final
distribution from a Participant's TRASOP Account (except a distribution upon
termination of the TRASOP) or in the case of a distribution of the Participant's
entire TRASOP Account balance after such time as all of the Shares in the
Participant's TRASOP Account have become Unrestricted Shares, such distribution
shall be made in respect of the number of whole Shares then remaining in the
Participant's TRASOP Account, together with a cash payment in respect of any
fractional Share based on the closing price of a Share as reported on the New
York Stock Exchange consolidated tape on the last trading day of the month
immediately preceding the month in which such final distribution is made. The
Trustee, in each such case, shall purchase such fractional Share from the
Participant at a price equal to the cash payment to be made to the Participant.
Whenever the Trustee requires funds for the purchase of fractional Shares, such
funds shall be drawn from

                                                                             103


the accumulated income of the TRSOP Trust Fund, if any, and otherwise shall be
advanced by CECONY upon the Trustee's request, subject to reimbursement from
future income of the TRASOP Trust. All fractional Shares so purchased by the
Trustee shall be allocated to the TRASOP Accounts of the remaining Participants
at such intervals as shall be determined by the Plan Administrator, but no later
than the end of the next succeeding Plan Year. The Trustee shall sell any Shares
in respect of which a cash distribution is to be made. The Trustee may make such
sales on any securities exchange where Shares are traded, in the
over-the-counter market, or in negotiated transactions. Such sales may be on
such terms as to price, delivery and otherwise as the Trustee may determine to
be in the best interests of the Participants. The Trustee shall complete such
sales as soon as practical under the circumstances having due regard for any
applicable requirements of law affecting the timing or manner of such sales. All
brokerage commissions and other direct selling expenses incurred by the Trustee
in the sale of Shares under this Subsection 13.04D shall be paid as provided in
Section 10.05.

     (e)     Upon any termination of TRASOP pursuant to Section 11.02, the Trust
shall continue until all Shares which have been allocated to Participants'
TRASOP Accounts have been distributed to the Participants, unless the Board
directs an earlier termination of the TRASOP Trust Fund. Upon the final
distribution of Shares, or at such earlier time as the Board shall have fixed
for the termination of the TRASOP Trust Fund, the Plan Administrator shall
direct the Trustee to allocate to the Participants any Shares then held by the
Trustee and not yet allocated, and the Trustee shall distribute to the
Participants any whole Shares which have been allocated to their TRASOP Accounts
but which have not been distributed, shall sell all fractional Shares and
distribute the proceeds to the respective

                                                                             104


Participants entitled to such fractional Shares, shall liquidate any remaining
assets (other than Shares) held by the TRASOP Trust Fund, and shall apply the
proceeds of such liquidation and any remaining funds held by the Trustee, the
disposition of which is not otherwise provided for, to a distribution to all
Participants then receiving a final distribution of Shares, in proportion to the
whole and fractional Shares to which each is entitled; and the TRASOP Trust Fund
shall thereupon terminate.

     (f)     Notwithstanding any other provision of this Plan, unless a
Participant otherwise elects in writing on a form furnished by CECONY:

     A.      Distribution of a Participant's TRASOP Account balance will
             commence not later than one (1) year after the close of the Plan
             Year

        (1)  in which the Participant terminates employment with the Company or
             an Affiliate by reason of Retirement upon or after attainment of
             Normal Retirement Age, death, or disability, or

        (2)  which is the fifth Plan Year following the Plan Year in which the
             Participant terminates employment for any other reason, and the
             Participant is not reemployed before such Plan Year.

     B.      Distribution of the Participant's TRASOP Account balance will be in
             five (5) annual distributions as promptly as practicable after the
             end of each Plan Year; provided, however, that a TRASOP Account
             balance that equals $5,000 or less shall be distributed in a single
             distribution as soon as practicable, but not later than 60 days
             after the close of the Plan Year in which the Participant's
             termination of employment occurs. Each such annual distribution
             shall be in respect of the number of Shares, rounded down to the

                                                                             105


             nearest number of whole Shares, which most closely approximates the
             entire balance in the Participant's TRASOP Account as of December
             31 of the previous year divided by the number of annual
             distributions remaining to be made under this subsection, except
             that the fifth such distribution shall be respect of the entire
             balance in the Participant's TRASOP Account as of the preceding
             December 31. Each such annual distribution shall be taken pro rata
             from all contribution years in Participant's TRASOP Account.

     C.      A Participant whose employment with the Company or an Affiliate is
             terminated by reason of Retirement, disability or any other reason
             (other than death) may elect in such a manner and on such
             conditions as may be prescribed by CECONY to have his TRASOP
             Account balance distributed in one of the following forms:

             (i)    a single lump sum distribution as soon as practicable, but
                    not later than 60 days after the end of the Calendar Year in
                    which the Participant's termination of employment occurs; or

             (ii)   a distribution deferred until the last day of a calendar
                    month not later than the calendar month in which the
                    Participant attains age 70, as designated by the
                    Participant, in which event the distribution of the
                    Participant's TRASOP Account balance as of the last day of
                    the calendar month so designated by the Participant shall be
                    made in a single lump sum as soon as practicable after such
                    calendar month.

     13.00   DIVERSIFICATION OF TRASOP ACCOUNTS

     (a)     DEFINITIONS: The following terms shall have the following meanings
for purposes of this Section 13.05:

                                                                             106


             (i)    Qualified Participant shall mean a Participant who has a
                    TRASOP Account and has attained at least age 55 and
                    completed at least 10 years of participation in TRASOP.

             (ii)   Qualified Election Period shall mean the first ninety (90)
                    days following the end of each Plan Year.

             (iii)  Eligible Shares shall mean Shares added to a Participant's
                    TRASOP Account after December 31, 1986.

             (iv)   Diversifiable Amount shall, with respect to any Qualified
                    Election Period, mean twenty-five percent (25%) of the
                    number of Eligible Shares in the Participant's TRASOP
                    Account as of the end of the preceding Plan Year. However,
                    if the Diversifiable Amount for any Qualified Election
                    Period shall have a value which may be deemed de minimis
                    under regulations issued by the Secretary of the United
                    States Department of the Treasury, then there shall be no
                    Diversifiable Amount available for such Qualified Election
                    Period.

     (b)     ELIGIBILITY FOR DIVERSIFICATION: Each Qualified Participant shall
have the right to elect to diversify, by means of a distribution of whole
Eligible Shares only, all or some portion of the Diversifiable Amount in his
TRASOP Account during each of the six (6) consecutive Qualified Election Periods
following the Plan Year in which such Participant first became a Qualified
Participant, provided, however, that, notwithstanding subsection 13.05.A.(d),
the Diversifiable Amount in the sixth Qualified Election Period for each
Qualified Participant shall be fifty percent (50%) of the number of Eligible
Shares in his TRASOP Account as to the end of the preceding Plan Year. A
distribution pursuant to this

                                                                             107


Article 13.05 must be a minimum of ten (10) Shares, or all Whole Shares
comprising the Diversifiable Amount for such Qualified Election Period if less
than 10. Each Qualified Participant who desires to elect diversification under
this Section shall, during the Qualified Election Period, complete and execute a
diversification election and consent form provided by CECONY. Such election may
be revoked or modified or a new election may be made in its stead within the
Qualified Election Period, upon the expiration of which the diversification
election shall be irrevocable.

     (c)     DIVERSIFICATION PROCEDURE

             (i)    The TRASOP shall, within the 90 day period following each
                    Qualified Election Period, distribute to each Qualified
                    Participant who has elected to diversify under this Section,
                    the number of whole Eligible Shares which most closely
                    approximates, but does not exceed, the number of Eligible
                    Shares duly elected to be diversified by each such Qualified
                    Participant. Failure by a Qualified Participant to provide
                    required consents to distribution of any Diversifiable
                    Amount, shall relieve the TRASOP of all obligation to make
                    any such distribution.

             (ii)   To the extent a Qualified Participant has Eligible Shares
                    which are Unrestricted Shares in his TRASOP Account, such
                    Unrestricted Shares shall be distributed pursuant to this
                    Section 13.05. Only upon exhaustion of all such Unrestricted
                    Shares may additional Eligible Shares then be distributed
                    hereunder.

                                                                             108


                                   ARTICLE XIV

                          EMPLOYEE STOCK OWNERSHIP PLAN

     14.01   PURPOSE - SEPARATE ENTITY

     (a) Effective as of the ESOP Effective Date, the Company established the
Consolidated Edison Employee Stock Ownership Plan ("ESOP") as a portion of,
included within and separate from the Thrift Plan. The ESOP affords special
rights and has specific requirements which must be satisfied that are distinct
from the Thrift Plan, such as the right of an ESOP Participant to: (1) vote his
or her allocated Shares; (2) request his or her distribution be in the form of
Shares; (3) diversify his or her ESOP Account; (4) elect to take dividends in
cash or have dividends reinvested; and, (5) be 100% fully invested immediately
in those Shares purchased by reinvested dividends. Each of these distinct ESOP
rights and requirements is set forth in the Thrift Plan and obligations in the
Thrift Plan such as those requirements regarding eligibility to participate,
vesting, distributions, in-service distributions, operational, administrative
and fiduciary requirements continue to apply to the ESOP and are deemed
incorporated into and so are not repeated in this Article XIV. The ESOP is
intended to be an employee stock ownership plan within the meaning of Code
Section 4975(e)(7). The ESOP is intended to give ESOP Participants an equity
interest in CEI and encourage ESOP Participants to remain in the employ of CEI.

     (b) Effective as of the ESOP Effective Date, the part of a Participant's
Employer Contributions Subaccount invested in the Company Stock Fund in the
Thrift Plan was transferred to the ESOP and ESOP Trust Fund and established and
included into the Participant's ESOP Account.

     (c) Participants' ESOP Accounts will be held in the ESOP Trust Fund and

                                                                             109


administered separately, although they shall be held as part of the same Trust
Fund. Participants are permitted to transfer assets to and from their ESOP
Accounts to their Thrift Plan Accounts within the ESOP Trust Fund and the Trust
Fund.

     14.02   SPECIAL DEFINITIONS FOR ESOP

     (a) The following terms shall have the following meanings for purposes of
the ESOP:

     (i)   ESOP ACCOUNT means the account into which is credited a Participant's
           Employer Contributions' invested in the Company Stock Fund and
           dividends paid on these Shares and comprising the following
           Subaccounts:

        (1)  the Participant's TRANSFERRED ESOP SUBACCOUNT which is the
             Participant's Company Stock Fund that was transferred from the
             Thrift Plan to the ESOP as of the ESOP Effective Date;

        (2)  a Participant's DIVIDEND SUBACCOUNT which, for a Participant who is
             credited with less than three Years of Service, consists solely of
             Shares purchased with reinvested dividends after the ESOP Effective
             Date and are 100% fully vested at all times; and

        (3)  a Participant's ESOP SUBACCOUNT which is the account into which is
             credited a Participant's Employer Contributions contributed to the
             ESOP after the ESOP Effective Date.

        (4)  Once a Participant is credited with at least three Years of Vesting
             Service, his or her Dividend Subaccount will be merged into his or
             her ESOP Subaccount. After the ESOP Effective Date, a Participant's
             ESOP Subaccount will include any Employer Contributions invested in
             the other Investment Funds to the extent such amounts were ever at
             any time invested in the ESOP after the ESOP Effective Date.

                                                                             110


     (ii)  ESOP EFFECTIVE DATE means May 8, 2002.

     (iii) ESOP PARTICIPANT means a Participant in the Thrift Plan who has
           elected to invest some or all of his or her Employer Contributions in
           the Company Stock Fund.

     (iv)  DIVERSIFIABLE ESOP AMOUNT, with respect to any Qualified ESOP
           Election Period, means 25% of the number of Shares in the
           Participant's ESOP Account as of the end of the preceding Plan Year.
           However, if the Diversifiable ESOP Amount for any Qualified ESOP
           Election Period has a value which may be deemed de minimis under
           regulations issued by the Secretary of the United States Department
           of the Treasury, then there will be no Diversifiable ESOP Amount
           available for such Qualified ESOP Election Period.

     (v)   QUALIFIED ESOP PARTICIPANT shall mean an ESOP Participant who has an
           ESOP Account, attained at least age 55 and completed at least 10
           years of participation in the ESOP. Years of participation in the
           Thrift Plan will be taken into account in determining whether a
           Qualified ESOP Participant has completed 10 years of participation.

     (vi)  QUALIFIED ESOP ELECTION PERIOD shall mean the first 90 days following
           the end of each Plan Year.

     14.03   PARTICIPATION IN ESOP

     Each Participant in the Thrift Plan who elects to have his or her Employer
Contributions invested in the Company Stock Fund will automatically become an
ESOP Participant in the ESOP. Each ESOP Participant will have his or her ESOP
Account held in the ESOP Trust Fund.

     14.04   EMPLOYER CONTRIBUTIONS

                                                                             111


     Only Employer Contributions and dividends issued on Shares held in the ESOP
Trust Fund will be contributed to the ESOP.

     14.05   PURCHASE OF SHARES PURCHASES FOR ESOP TRUST FUND. The Trustee shall
regularly purchase Shares for the ESOP Trust Fund in accordance with a
non-discretionary purchasing program. Such purchases may be made on any
securities exchange where Shares are traded, in the over-the-counter market, or
in negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interests of the ESOP
Participants. Interest and other income received on assets held in the ESOP
Trust Fund shall be reinvested in the ESOP Trust Fund. All funds to be invested
shall be invested by the Trustee in one or more transactions promptly after
receipt by the Trustee, subject to any applicable requirement of law affecting
the timing or manner of such transactions. All brokerage commissions and other
direct expenses incurred by the Trustee in the purchase of sale of Shares under
the ESOP will be borne by the ESOP Account investing and/or trading in Shares.

     (b) UNITS. The interests of an ESOP Participant in his or her ESOP Account
shall be measures in Units, the number and value of which shall be determined
daily.

                                                                             112


     14.06   DIVIDENDS

     Beginning on and after the ESOP Effective Date, and for all Plan Years
thereafter, dividends received by the Trustee with respect to Shares allocated
to the ESOP Accounts, in accordance with the election of each ESOP Participant,
will be either paid in cash to the ESOP Participant as soon as practicable
following the declaration date but in any case not later than 90 days after the
close of the Plan Year in which the dividends are paid or applied by the Trustee
for the purchase of additional Shares.

     An ESOP Participant will be given a reasonable opportunity before a
dividend is paid or distributed to make the election. The ESOP Participant will
have a reasonable opportunity to change a dividend election at least annually.
If there is a change in the ESOP governing the manner in which the dividends are
paid or distributed to ESOP Participants, each ESOP Participant will be given a
reasonable opportunity to make an election under the new ESOP terms prior to the
date on which the first dividend subject to the new ESOP terms is paid or
distributed. An ESOP Participant who fails to make an election as to whether to
receive his or her dividend in cash or have such dividend reinvested will be
treated as if he or she elected to have his or her dividend reinvested until
such time that he or she makes an affirmation election for a distribution of the
dividend. If dividends are reinvested and applied to the purchase of additional
Shares, such purchases shall be made promptly after the receipt of each such
dividend. The Trustee shall purchase, in one or more transactions, the maximum
number of whole Shares obtainable at then prevailing prices, including brokerage
commissions and other reasonable expenses incurred in connection with such
purchases. Such purchases may be made on any securities exchange where Shares
are traded, in the over-the-counter market, or in negotiated transactions, and
may be on such terms as to price, delivery and otherwise as the Trustee may
determine to be in the best interest of the ESOP

                                                                             113


Participants. The Trustee shall complete such purchases as soon as practical
after receipt of such dividends, having due regard for any applicable
requirements of law affecting the timing or manner of such purchases. The
additional Shares so purchased shall be allocated among the respective ESOP
Accounts of the Participants in proportion to the number of Shares in each ESOP
Account at the record date for the payment of the dividend so applied. Such
allocation shall be made as promptly as practicable but for purposes of
determining the time at which such additional Shares shall become distributable,
the additional Shares so allocated to each ESOP Participant's ESOP Account shall
be deemed to have been allocated as of the respective allocation dates of the
Shares in such ESOP Account at such record date, in proportion to the number of
such Shares previously allocated as of each such allocation date.

     14.07   VOTING RIGHTS, OPTIONS, RIGHTS, AND WARRANTS

     (a) Each ESOP Participant is entitled to direct the Trustee as to the
manner in which any Shares or fractional Shares allocated to the ESOP
Participant's ESOP Account are to be voted. Any such Shares or fractional Share
for which the Participant does not give voting directions shall be voted by the
Trustee n the same manner and proportions as all other Shares held by the
Trustee for which voting directions are given by ESOP Participants.

     (b) In the event that any option, right, or warrant shall be granted or
issued with respect to any Shares allocated to the ESOP Participant's ESOP
Account, each ESOP Participant shall be entitled to direct the Trustee whether
to exercise, sell, or deal with such option, right, or warrant.

     (c) The Trustee shall keep confidential the ESOP Participant's voting
instructions and instructions as to any option, right or warrant and any
information regarding an ESOP

                                                                             114


Participant's purchases, holdings and sales of Shares. The Plan Administrator
shall be responsible for monitoring the Trustee's performance of its
confidentiality obligations.

     14.08   TRANSFERABILITY

     A Participant may transfer all or any part of his or her existing ESOP
Account once a day to any other Investment Funds in the Trust Fund. Any election
will be made in such manner and on such conditions as may be prescribed by the
Plan Administrator and subject to any restrictions imposed on an Investment Fund
by the Trustee or Investment Manager.

     14.09   DIVERSIFICATION

     (a) Each Qualified ESOP Participant shall have the right to elect to
diversify, by means of a distribution of whole ESOP Shares only, all or some
portion of the Diversifiable Amount in his ESOP Account during each of the six
consecutive Qualified ESOP Election Periods following the Plan Year in which
such Participant first became a Qualified ESOP Participant. The Diversifiable
ESOP Amount in the sixth Qualified ESOP Election Period for each Qualified ESOP
Participant shall be 50% of the number of Eligible ESOP Shares in his or her
ESOP Account as of the end of the preceding Plan Year. A distribution pursuant
to this must be a minimum of ten Shares, or all Whole Shares comprising the
Diversifiable ESOP Amount for such Qualified ESOP Election Period if less than
10. Each Qualified ESOP Participant who desires to elect diversification under
this Section shall, during the Qualified ESOP Election Period, complete and
execute a diversification election and consent form provided by his or her
Employer. Such election may be revoked or modified or a new election may be made
in its stead within the Qualified ESOP Election Period, upon the expiration of
which the diversification election shall be irrevocable.

     (b) Diversification Procedure. The ESOP shall, within the 90-day period
following each Qualified ESOP Election Period, distribute to each Qualified ESOP
Participant who has

                                                                             115


elected to diversify under this Section, the number of whole Shares which most
closely approximates, but does not exceed, the number of ESOP Shares duly
elected to be diversified by each such Qualified ESOP Participant. Failure by a
Qualified ESOP Participant to provide required consents to distribution of any
Diversifiable ESOP Amount, shall relieve the ESOP of all obligation to make any
such distribution.

     14.10   DISTRIBUTION OF SHARES

     (a) An ESOP Participant's ESOP Account shall be available for distribution
to such ESOP Participant promptly after the earlier of the death, disability or
termination of employment of such ESOP Participant.

     (b) If an ESOP Participant elects a distribution in Shares, certificates
for such Shares shall be delivered to the ESOP Participant as soon as
practicable after the effective date of the application.

     (c) In the case of death of an ESOP Participant, distributions in respect
of Shares allocated to his or her ESOP Account shall be made to his or her
Beneficiary. In the case of disability or termination of employment with the
Company or an Affiliate, distributions in respect of Shares allocated to the
ESOP Participant's ESOP Account shall be made unless the ESOP Participant elects
otherwise.

     (d) All distributions from an ESOP Participant's ESOP Account shall be made
in Shares; provided, however, that an ESOP Participant or Beneficiary shall have
the right to elect, on a form furnished by and submitted to his or her Employer,
to receive a distribution, other than a distribution upon termination of the
ESOP, in cash. Except in the case of a final distribution from an ESOP
Participant's ESOP Account and a distribution of the entire ESOP Account
balance, all distributions from such ESOP Account made in Shares shall be made
in respect of whole Shares only, and any fractional Share which is otherwise
distributable shall

                                                                             116


be retained in such ESOP Account until it can be combined, in whole or in part,
with another fractional Share which shall subsequently become distributable, so
as to make up a whole Share. A final distribution from an ESOP Account (except a
distribution upon termination of the ESOP) shall be made in respect of the
number of whole Shares then remaining in the ESOP Account, together with a cash
payment in respect of any fractional Share based on the closing price of a Share
as reported on the New York Stock Exchange consolidated tape on the last trading
day of the month immediately preceding the month in which such final
distribution is made. The Trustee, in each such case, shall purchase such
fractional Share from the ESOP Participant at a price equal to the cash payment
to be made to the ESOP Participant.

     (e) Whenever the Trustee requires funds for the purchase of fractional
Shares, such funds shall be drawn from the accumulated income of the ESOP Trust
Fund, if any, and otherwise shall be advanced by the Employer upon the Trustee's
request, subject to reimbursement from future income of the ESOP Trust Fund. All
fractional Shares so purchased by the Trustee shall be allocated to the ESOP
Accounts of the remaining Participants at such intervals as shall be determined
by the Plan Administrator, but no later than the end of the next succeeding Plan
Year. The Trustee shall sell any Shares in respect of which a cash distribution
is to be made. The Trustee may make such sales on any securities exchange where
Shares are traded, in the over-the-counter market, or in negotiated
transactions. Such sales may be on such terms as to price, delivery and
otherwise as the Trustee may determine to be in the best interests of the ESOP
Participants. The Trustee shall complete such sales as soon as practical under
the circumstances having due regard for any applicable requirements of law
affecting the timing or manner of such sales.

                                                                             117


     (f) Upon any termination of the ESOP, the ESOP Trust Fund shall continue
until all Shares which have been allocated to ESOP Participants' ESOP Accounts
have been distributed to the ESOP Participants, unless the Board directs an
earlier termination of the ESOP Trust Fund. Upon the final distribution of
Shares, or at such earlier time as the Board shall have fixed for the
termination of the ESOP Trust Fund, the Plan Administrator shall direct the
Trustee to allocate to the ESOP Participants any Shares then held by the Trustee
and not yet allocated, and the Trustee shall distribute to the ESOP Participants
any whole Shares which have been allocated to their ESOP Accounts but which have
not been distributed, shall sell all fractional Shares and distribute the
proceeds to the respective ESOP Participants entitled to such fractional Shares,
shall liquidate any remaining assets (other than Shares) held by the ESOP Trust
Fund, and shall apply the proceeds of such liquidation and any remaining funds
held by the Trustee, the disposition of which is not otherwise provided for, to
a distribution to all ESOP Participants then receiving a final distribution of
Shares, in proportion to the whole and fractional Shares to which each is
entitled; and the ESOP Trust Fund shall thereupon terminate.

                                                                             118


                                   APPENDIX A
                             PARTICIPATING EMPLOYERS


A.      LIST OF PARTICIPATING EMPLOYERS

        The following list sets forth:

        (i)     the Participating Employers,

        (ii)    the effective date of each Employer's participation, and

        (iii)   the designation of those employees who will become
                Participants or continue their participation in the Plan.



                                      EFFECTIVE DATE OF
NAME OF COMPANY                       PARTICIPATION          ELIGIBLE EMPLOYEES

                                                       
Consolidated Edison                   May 1, 1996            All otherwise Eligible Employees.
  Development, Inc.

Consolidated Edison Solutions, Inc.   May 1, 1997            All otherwise Eligible Employees.

Consolidated Edison                   February 1, 1999       All otherwise Eligible Employees.
  Communications, Inc.

Consolidated Edison Energy, Inc.      March 1, 1998          All otherwise Eligible Employees.

Orange and Rockland Utilities, Inc.   January 1, 2001        All otherwise Eligible Employees

Consolidated Edison Energy            July 18, 1999          Employees working at the Western Massachusetts
  Massachusetts, Inc.                                        Electric Cogeneration Facility.

CED Operating Company, L.P.           June 1, 2000           Employees working at the Lakewood Cogeneration
                                                             Facility


                                                                             119

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Exhibit 12.1

Consolidated Edison, Inc.

RATIO OF EARNINGS TO FIXED CHARGES
FOR SIX MONTHS ENDED JUNE 30, 2002

EARNINGS
	Net Income			$	270,982
	Income tax				154,404
	Total Earnings before Income tax				425,386
FIXED CHARGES*					218,800
		Total Earnings before Income tax and fixed charges		$	644,186
*Fixed Charges
	Interest on Long-Term Debt			$	193,190
	Other Interest				18,768
	Interest on Component of Rentals				6,842
		Total Fixed Charges		$	218,800
Ratio of Earnings To Fixed Charges					2.94

Consolidated Edison, Inc.

RATIO OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS ENDED
(THOUSANDS OF DOLLARS)

				June 2002			December 2001
EARNINGS
	Net Income for Common Stock			$	666,637		$	682,242
	Preferred Dividends				13,593			13,593
	Income Tax				400,384			442,631
		Total Earnings Before Federal Income Tax			1,080,614			1,138,466
FIXED CHARGES*					446,828			457,554
		Total Earnings Before Federal Income Tax and Fixed Charges		$	1,527,442		$	1,596,020
*Fixed Charges
	Interest on Long-Term Debt			$	379,896		$	384,422
	Amortization of Debt Discount, Premium and Expense				12,681			12,526
	Interest on Component of Rentals				13,684			18,783
	Other Interest				40,567			41,823
		Total Fixed Charges		$	446,828		$	457,554
Ratio of Earnings to Fixed Charges					3.42			3.49

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Consolidated Edison, Inc. RATIO OF EARNINGS TO FIXED CHARGES FOR SIX MONTHS ENDED JUNE 30, 2002
Consolidated Edison, Inc. RATIO OF EARNINGS TO FIXED CHARGES TWELVE MONTHS ENDED (THOUSANDS OF DOLLARS)

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Exhibit 12.2

Consolidated Edison Company of New York, Inc.

RATIO OF EARNINGS TO FIXED CHARGES
FOR SIX MONTHS ENDED JUNE 30, 2002

EARNINGS
	Net Income			$	254,650
	Income tax				136,820
		Total Earnings before Income tax			391,470
FIXED CHARGES*					191,151
		Total Earnings before Income tax and fixed charges		$	582,621
*Fixed Charges
	Interest on Long-Term Debt			$	169,355
	Other Interest				15,717
	Interest on Component of Rentals				6,079
		Total Fixed Charges		$	191,151
Ratio of Earnings To Fixed Charges					3.05

Consolidated Edison Company of New York, Inc.

RATIO OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS ENDED
(THOUSANDS OF DOLLARS)

				June 2002			December 2001
EARNINGS
	Net Income			$	636,201		$	663,061
	Income Tax				375,182			427,168
		Total Earnings Before Income Tax			1,011,383			1,090,229
FIXED CHARGES*					395,866			409,588
Total Earnings Before Income Tax and Fixed Charges				$	1,407,249		$	1,499,817
*Fixed Charges
	Interest on Long-Term Debt			$	337,967		$	347,260
	Amortization of Debt Discount, Premium and Expense				12,681			12,527
	Interest on Component of Rentals				12,157			17,478
	Other Interest				33,061			32,323
		Total Fixed Charges		$	395,866		$	409,588
Ratio of Earnings to Fixed Charges					3.56			3.66

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Consolidated Edison Company of New York, Inc. RATIO OF EARNINGS TO FIXED CHARGES FOR SIX MONTHS ENDED JUNE 30, 2002
Consolidated Edison Company of New York, Inc. RATIO OF EARNINGS TO FIXED CHARGES TWELVE MONTHS ENDED (THOUSANDS OF DOLLARS)

                                                                  Exhibit 99.1.1

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Eugene R. McGrath, the Chief Executive Officer of Consolidated Edison,
Inc. (the "Company") certify that the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2002, which this statement
accompanies, (the "Form 10-Q") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m
or 78o(d)) and that the information contained in the Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of the Company.

                                            /s/ Eugene R. McGrath
                                            Eugene R. McGrath


Dated: August 12, 2002

                                                                  Exhibit 99.1.2

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002

I, Joan S. Freilich, the Chief Financial Officer of Consolidated Edison, Inc.
(the "Company") certify that the Company's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2002, which this statement accompanies,
(the "Form 10-Q") fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and
that the information contained in the Form 10-Q fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

                                      /s/ Joan S. Freilich
                                      Joan S. Freilich


Dated: August 12, 2002

                                                                  Exhibit 99.2.1

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002

I, Eugene R. McGrath, the Chief Executive Officer of Consolidated Edison
Company of New York, Inc. (the "Company") certify that the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002,
which this statement accompanies, (the "Form 10-Q") fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q
fairly presents, in all material respects, the financial condition and
results of operations of the Company.

                                         /s/ Eugene R. McGrath
                                         Eugene R. McGrath


Dated: August 12, 2002

                                                                  Exhibit 99.2.2

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Joan S. Freilich, the Chief Financial Officer of Consolidated Edison
Company of New York, Inc. (the "Company") certify that the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002,
which this statement accompanies, (the "Form 10-Q") fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q
fairly presents, in all material respects, the financial condition and
results of operations of the Company.

                                           /s/ Joan S. Freilich
                                           Joan S. Freilich


Dated: August 12, 2002

                                                                  Exhibit 99.3.1

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002


I, Stephen B. Bram, the Chief Executive Officer of Orange and Rockland
Utilities, Inc. (the "Company") certify that the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2002, which this
statement accompanies, (the "Form 10-Q") fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78o(d)) and that the information contained in the Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of the Company.

                                              /s/ Stephen B. Bram
                                              Stephen B. Bram


Dated: August 12, 2002

                                                                  Exhibit 99.3.2

   Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002

I, Edward J. Rasmussen, the Chief Financial Officer of Orange and Rockland
Utilities, Inc. (the "Company") certify that the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2002, which this
statement accompanies, (the "Form 10-Q") fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78o(d)) and that the information contained in the Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of the Company.

                                            /s/ Edward J. Rasmussen
                                            Edward J. Rasmussen


Dated: August 12, 2002